Mutual funds nomination: Deadline to add nominee for demat account, MF schemes to end on Sept 30

The deadline to update the nomination for your mutual fund (MF) investments, trading, and demat accounts will end on September 30, 2023. Earlier the deadline was March 31, 2023. The Securities and Exchange Board of India (Sebi), in a circular, said: "Based on representations received from the market participants, it has been decided that the provision mentioned at para 4 of SEBI circular dated June 15, 2022 with regard to freezing of folios, shall come into force with effect from September 30, 2023 instead of March 31, 2023."

On June 15, 2022, Sebi had made the nomination mandatory for the existing mutual fund folios, including the jointly held ones by August 1, 2022. The deadline was then extended to October 1, 2022, then to March 31, 2023, and then to September 30, 2023.

In its March circular, Sebi said: "AMCs and RTAs shall encourage the unit holder(s)to fulfil the requirement for nomination/opting out of nomination by sending a communication on fortnightly basis by way of emails and SMS to all such unit holder(s) who are not in compliance with the requirement of nomination.”

Earlier, Sebi had announced that it is now compulsory for the new mutual fund unit holders to submit either the nomination form or declare that they are opting out of the nomination.

It is to be noted that neglecting the nominee update can result in the Mutual Fund (MF) folios being frozen for all debit transactions, including redemptions and withdrawals.

Why nomination is crucial

As per experts, the nomination procedure in mutual funds is a critical aspect of financial planning. It can evade the chances of losing the entire investment in case of any unfortunate event of an investor's demise. In such a situation, the nominated person or persons can receive the benefits of the investments. 

According to the Association of Mutual Funds in India (AMFII), “Nomination is a facility that enables an individual to nominate a person, who can claim the Units held by the unitholder or the redemption proceeds thereof in the event of death the unitholder.”

How to add the nominees for MF schemes

The process of adding nominations in mutual funds folios can be updated both through online and offline modes. Those who have opted for offline mode need to fill up a nomination form with the Registrar and Transfer Agent (RTA) or the mutual fund house. 

For the online mode, accountholders can simply check their mutual fund statement to see if the nominee details are in place. One can do so via a two-factor authentication login.

How to update nominations for MF schemes

Those who want to update their mutual fund nominations online can visit the MF house’s web portal or NSDL website.

> Go to the NSDL’s portal at https://nsdl.co.in/

> On the homepage, click on the 'Nominate Online' option 

> A new page will appear on the screen and will ask for your DP ID, client ID, PAN, and OTP

> After entering the details, one will see two options: 'I wish to Nominate' and 'I do not wish to nominate'

> When you will opt for to add a nominee, a new page will open seeking the nominees' details. 

> Next, on the eSign Service Provider’s page, enable the checkbox and click on 'Proceed'

> In the final stage, you will need to verify the OTP. The OTP will be sent to your email and registered phone number.

For direct investors

Direct investors can also visit MFCentral, an investment management platform, to update their nominations. This service is available for single holding folios and asks for OTP-based authentication. 

After making the changes, investors can track the status of their request on the portal. For jointly held folios, it's necessary to approach the fund houses directly.

How CAMS customers can update nominee

> Click on the link to register Nominee(s) or opt-out declaration http://bit.ly/3Q6d0Tl
> Select 'Add Nominee'. You can also edit the nominee details such as the addition/modification in the existing folio's where Nominee's already registered, or No Nomination opted.

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