Mutual fund nomination date extended to Sept 30, 2023

Mutual fund nomination date extended to Sept 30, 2023

The capital markets regulator, Sebi, has extended the last date for mutual fund nominations to 30th September 2023. The regulatory guidelines require investors to mention nominees for their fund folios or else inform the fund house that they wish to opt out of nominations by September 30.

In a circular, the regulator states, " 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."

Nomination is a process of appointing a person to take care of your assets in the event of death. It is mandatory for new folios/accounts opened by investors to make a nomination. In case an investor does not wish to nominate, they can opt out of the process while filling up the form.

When a nomination is registered, it helps facilitate the easy transfer of funds to the nominee in the event of the demise of an investor. In the absence of a nominee, the heirs/claimants will need to produce a host of documents like a will, legal heir certificate, NOCs from other legal heirs, etc, to get their units transferred in his or her name.

What will happen if you miss filing the nomination by September 30 deadline? If you do not make a nomination in your existing folio, the folio will be frozen which means that investors will not be able to switch or redeem investments.

"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. The communication shall provide guidance by which the unit holder(s) can provide nomination or opt out of the nomination," the circular adds.

For investors of mutual funds, the completion of nomination can be done via the websites of the RTA such as CAMD and KFintech, which will request a one-time-password (OTP).

Also read: New debt mutual fund norms: AMCs open subscription for international schemes