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Zerodha's online nomination feature to help find solution for Rs 80,000 cr unclaimed money: Nithin Kamath

Zerodha's online nomination feature to help find solution for Rs 80,000 cr unclaimed money: Nithin Kamath

Zerodha's says many miss adding nominees to demat accounts, partly because adding a nominee was an offline process. But now, one can now add up to three nominees online. They are alerted if your account goes dormant for over a year

Nithin (front) and Nikhil Kamath, founders, Zerodha Nithin (front) and Nikhil Kamath, founders, Zerodha

Online broking firm Zerodha's co-founder Nithin Kamath today said the company's new 'alert' feature, will help in solving the problem of unclaimed money. Kamath said around Rs 80,000 crores of unclaimed money is lying unclaimed across banks, mutual funds, demats and more.

"There's at least Rs 80,000 crores of unclaimed money across Banks, Mutual funds, Demats, & more. We are hoping this alert feature which notifies nominees when accounts become dormant & they don't reKYC, can help in solving this problem," he tweeted, adding that hopefully, the banks and others will follow.

He reacted to a tweet by the company that said most people miss adding nominees to their demat accounts, partly because adding a nominee was an offline process. This leads to issues in the case of unforeseen events, it added.
"Not anymore. You can now add up to 3 nominees online. We'll also alert your nominees if your account is dormant," it said.

As per the company, this nomination covers users' all kinds of investments at Zerodha, including stocks, mutual funds and bonds. Zerodha says users can add single or multiple nominees to their trading and demat account, completely online.

Also read: New-age fund houses looking to replicate broking success in mutual fund arena

"We will alert your nominee(s) over email/SMS if your account becomes dormant after one whole year of inactivity and you do not activate it by performing reKYC in time in response to the notifications we send you," says the company.

The company said nominee(s) are also informed of the existence of the person's trading and demat account and the nomination in case of any unfortunate eventualities.

While the demat account opening became digital in 2016, adding nominees has been a physical process until now. This is because the process of nomination that the government defined mandated the collection of a physical form and multiple witness signatures. The regulation around this changed very recently, with market regulator SEBI allowing an option to add up to 3 nominees to your trading and demat account completely online using eSign.

Why do the nominees have to be alerted?

  • A recent survey showed there is a corpus of over Rs 82,000 crore lying in unclaimed deposits in India. This is a conservative estimate and includes:
  • Unclaimed Provident Fund Accounts – Rs 26,497 cr
  • Unclaimed Bank Accounts – Rs 18,381 cr
  • Inactive Mutual Fund Accounts – Rs 17,880 cr
  • Unclaimed LIC Policies – Rs 15,167 cr
  • Matured Fixed Deposits – Rs 4,820 cr
  • Unclaimed Dividends – Rs 4,100 cr
  • These are unclaimed, most likely because the nominees don’t know of the existence of these assets.

Also read: Zerodha gets SEBI's in-principle nod to set up mutual fund business

How to add a nominee

  • You can do this by visiting Zerodha’s Console.
  • If you are adding multiple nominees, make sure to mention the percentage of holding that you want to allocate to each nominee
  • You need Aadhaar linked to mobile number to receive the OTP and eSign
  • You also need to upload the proof of identity of the nominee in PDF format
  • Once you have completed the above process, nominee addition to the account can take up to 48 hours. You will get an email from Zerodha as well as from CDSL (Depository)
  • For the user's privacy, no email notification is sent to the nominee(s) immediately. An alert is sent only when the account becomes dormant after one year of inactivity
  • Once you add one or more nominees, you can’t modify it or add a new nominee online. You will need to send us a physical nomination form
  • Non-individual accounts (including HUFs) can't have nominees. Joint accounts will need to send the physical nomination form

Also read: Crypto to disrupt broking industry, predicts Zerodha founder Nithin Kamath