Mutual Fund Nomination: File Nomination Before Deadline or Account may Get Frozen

The mutual fund (MF) nomination date of March 31, 2023 is quickly approaching. Last year, the capital markets regulator Securities and Exchange Board of India (Sebi) issued a circular requiring all MF investors to either fill out the nominee form or opt out. Please verify your funds for the nominee's update, since if you do not comply with the requirement, your assets will be frozen.

Nominees act as the representative and are important to ensure that investments are passed on to your loved ones in the unfortunate event of your untimely death. As a result, it is important to select a trustworthy individual and make a sound selection. Act immediately to protect your family's and your own financial future by not delaying until it's too late.

According to SEBI's circular of 15 June 2022, all investors will be able to nominate mutual fund units they own or opt out of the nomination facility entirely. If the nomination is not submitted by March 31, their investments will be locked and no transactions will be permitted. Asset management companies (AMCs) will have to provide unit holders the option of submitting either the nomination form or the declaration form to opt out of the nomination in either physical or online form, depending on their preference, under the new structure.

In the case of a physical option, the forms will include all unit holders' wet signatures, and in the case of an online option, the forms will include an e-sign facility instead of all unit holders' wet signatures. AMCs must guarantee that suitable mechanisms for offering the e-sign capability are in place, and they must take all necessary actions to safeguard the confidentiality and safety of client records. The action is intended to create uniformity in processes across all securities market participants. In 2021, Sebi gave investors a similar option when creating new trading and demat accounts. There are now 42 mutual fund firms that handle assets of around Rs 40 lakh crore.