Capital markets regulator Sebi has eased the nomination process for demat accounts and mutual fund folios in a bid to make investing more convenient and reduce the rise in unclaimed financial assets.
Under the revised framework announced on Friday, investors opening single-holder demat accounts or mutual fund folios from September 1, 2026, will have to either nominate a beneficiary or officially opt out by submitting a declaration.
Created with AI. Errors are possibleThe latest changes come after market participants raised operational concerns regarding the nomination rules introduced earlier. Sebi said the updated framework is designed to improve investor convenience and streamline the overall process.
As per the new norms, nomination will continue to be compulsory for single-holder accounts unless the investor specifically chooses not to nominate anyone. However, for jointly held accounts and folios, nomination will remain optional.
Investors can now appoint up to three nominees for their investments.
In a major relief, Sebi has removed the requirement of a witness signature for nomination forms signed normally by investors. A witness will now be needed only if the investor uses a thumb impression instead of a signature.
The regulator has also simplified the information required for nominations. Investors will only need to provide the nominee’s name and relationship with the account holder. If the nominee is a minor, the date of birth will also have to be mentioned.
Other details such as Aadhaar number, PAN, passport details, mobile number, email address and percentage allocation among nominees will remain optional.
In cases where multiple nominees are added without specifying individual shares, the investment holdings will be divided equally among them.
Sebi has also widened the scope for digital nomination submissions. Investors will be able to complete the process online through digital signature certificates, Aadhaar-based e-sign, recognised electronic signature facilities, or two-factor authentication using OTP verification on registered mobile numbers and email IDs.
The market regulator has instructed depositories, depository participants, mutual fund registrars and asset management companies to offer both online and offline nomination facilities. Investors will also be free to change, update or cancel nominations any number of times.
For jointly held accounts, any nomination or modification in nomination details will require consent from all account holders, irrespective of the mode of operation.
To encourage more investors to complete nominations, Sebi has directed intermediaries to send SMS and email reminders twice every year to investors who have neither added a nominee nor opted out formally.
Additionally, online investment platforms will have to display pop-up alerts explaining the importance of nominations whenever such investors log in to their accounts.
According to Sebi, these measures are aimed at reducing the chances of securities and mutual fund units remaining unclaimed after the death of an investor.
The regulator has also introduced changes to account statements. Going forward, statements will either mention the nominee’s name or indicate whether a nomination exists, depending on the preference selected by the investor.
Sebi has repeatedly highlighted concerns over rising unclaimed financial assets and has been urging investors to update nomination details across investment products. Under current regulations, financial assets that remain unclaimed for long periods may eventually be transferred to the Investor Education and Protection Fund Authority (IEPF).
The revised nomination norms will replace all previous circulars related to demat accounts and mutual fund folios. The new rules will become effective from September 1, 2026, allowing market intermediaries enough time to update systems and implement the revised procedures.
The latest changes are expected to make account opening and nomination management smoother while ensuring easier transfer of securities and mutual fund holdings to nominees and legal heirs.
