New Nomination Rules: Nominate Up to 10 Individuals in Your Demat & Mutual Fund Accounts
25 March, 2025
Synopsis:
Investors can nominate up to 10 individuals for mutual fund accounts and demat accounts, ensuring smoother asset transfers.
Proper nomination prevents family disputes and delays in accessing investments after an investor’s passing.
Nomination is now compulsory for single account holders, while joint holders can nominate.
Investors can update nominee details online using e-signatures or offline via physical forms.
Updating nominations ensures that hard-earned wealth reaches intended beneficiaries without complications.
Suppose you are a responsible investor who has carefully built wealth through mutual funds and stocks. You assumed your investments would seamlessly pass on to your family if anything happened to you. However, after your unexpected demise, your wife and children faced difficulties because you hadn’t updated your nomination details. Your hard-earned investments remained stuck in bureaucratic procedures, causing emotional and financial distress for your family.
To prevent such situations, the Securities and Exchange Board of India (SEBI) has introduced a significant change where Investors can now nominate up to 10 individuals in mutual fund folios and demat accounts, ensuring a smoother transfer of assets to their loved ones.
What This Means for Investors
SEBI’s new rule, effective from March 1, 2025, enhances flexibility in estate planning. Earlier, investors were limited in their nomination choices, sometimes leading to disputes or unclaimed investments. Now, by allowing up to 10 nominees, SEBI ensures that investors can allocate their wealth more efficiently and according to their wishes.
Key Highlights of the New Nomination Rules
Up to 10 Nominees Per Account: Investors can now appoint up to 10 individuals as nominees and assign specific percentages of the assets to each. If no percentage is mentioned, the assets will be divided equally.
Mandatory Nomination for Single Holders: Providing a nominee is now compulsory if you hold mutual fund accounts or a Demat account in a single name. Joint account holders can still choose to nominate, but it is not mandatory.
Detailed Nominee Information Required: Investors must provide key details for each nominee, such as PAN, Aadhaar (last four digits), and contact information, ensuring transparency and accountability.
Simple Online and Offline Nomination Process: Investors can update their nominations digitally via Aadhaar-based e-signatures or through a physical form submission.
Nominee as a Trustee, Not a Legal Heir: The nominee acts as a custodian of the assets until they are claimed by the legal heirs, reducing ambiguity in inheritance.
Survivorship Rule for Joint Accounts: If you hold a mutual fund account, the surviving holder automatically retains access unless specified otherwise.
Simplified Asset Transmission Process: SEBI has streamlined the asset transmission process, requiring only essential documents such as a self-attested copy of the deceased investor's death certificate and updated Know Your Customer (KYC) details of the nominee.
Provisions for Incapacitated Investors: AMCs can allow nominees (excluding minors) to operate the investor's folio in case of investor incapacitation. Investors can specify the absolute value of assets that each nominee can redeem on their behalf.
Verification Process for Incapacitation: For incapacitated investors, AMCs will send an officer to visit the investor and request a medical certificate to verify the reason for inability to affix signature.
Standardised Procedures: AMFI will issue standard operating procedures (SOPs) for dealing with incapacitated investors, ensuring consistent handling across all asset management companies.
If you update your nomination details and utilise the new multi-nominee feature, your family will avoid months of legal trouble. This simple step can make a huge difference in protecting your loved ones’ financial future.
Take control of your financial legacy today! Update your nominee details in your HDFC Bank SmartWealth App by following these steps-
1. Download the HDFC Bank SmartWealth App and log in using your mobile number.
2. After entering the OTP, add DOB or PAN No.
3. Set up MPIN and accept terms and conditions.
4. The App will then redirect you to the HDFC Bank Net Banking page to open the savings bank account.
5. Once the account is set up, you can add nominees to your SmartWealth account.
Update your nominations today to ensure your wealth is seamlessly passed on to your loved ones. Financial planning isn’t complete without a secure legacy.
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