29-Dec-2023
2 mins read
In an important decision by The Securities and Exchange Board of India (SEBI), the deadline for nomination filing in mutual funds and Demat accounts has been extended. Steps have been taken to streamline the process of passing the account and its benefits to the legal successors. Prior, the deadline was December 31, 2023, which has now been extended to June 30, 2024.
Timetable for Extensions
The action taken by SEBI is part of an ongoing effort to improve investor convenience. The regulatory body extended the deadline from September 30, 2023, to December 31, 2023, and has now been granted an additional extension. This move aims to give investors enough time to fulfil the nomination procedures and safeguard their funds.
SEBI’s Financial Entities Guidelines
SEBI’s most recent directive requires Registrar and Transfer Agents (RTAs), asset management companies (AMCs), and depository participants to maintain regular customer communications. The instruction specifies that investors who still need to finish the nomination process will be the target audience for updates sent via email and SMS every two weeks. This proactive strategy aims to help investors promptly comply with the nomination norms.
The Critical Role of Nomination
Nomination is a key process that guarantees the seamless transfer of securities to designated beneficiaries upon an investor’s demise. As per SEBI, nominations are essential to prevent disruptions in accessing or managing accounts. By the end of September 2023, data revealed that around 25 lakh PAN holders still needed to update their nominations in mutual fund folios, underscoring the urgency of the extended deadline.
Consequences of Non-Compliance
Investors who fail to adhere to the nomination process face significant consequences. SEBI has warned that non-compliance could result in freezing debits from mutual fund holdings. This restriction would bar investors from redeeming or withdrawing funds and using their demat accounts for stock trading.
The extension of the nomination deadline by SEBI is a critical step in safeguarding investor interests. It acknowledges investors’ difficulties and aims to prevent potential complications for heirs. Investors are strongly encouraged to complete their nomination process within this extended timeframe to ensure the security of their financial assets for the future.