SEBI has mandated that mutual fund unit holders must nominate beneficiaries, and here is a step-by-step guide to the online process.
SEBI, the Securities and Exchange Board of India, has extended the deadline for mutual fund account holders to nominate beneficiaries. They now have until January 1 to nominate a beneficiary or choose to opt-out by submitting a declaration form.
The Mutual Fund Nomination Process: A Step-by-Step Tutorial
Mutual fund investors can nominate a beneficiary or opt out of nomination by contacting their mutual fund management company or registrar and transfer agent (RTA). Alternatively, they can complete these actions online through the mutual fund management company’s or RTA’s website.
For the online method, follow these steps:
- Visit the NSDL portal.
- On the homepage, locate and click on the ‘Nominate Online’ option.
- Provide your DP ID, client ID, and PAN, and submit the OTP.
- Choose either ‘I wish to nominate’ or ‘I do not wish to nominate.’
- If you select ‘I wish to nominate,’ a new page will open where you can enter the nominee’s details.
- On the e-Sign Service Provider’s page, check the box and click on ‘Proceed.’
- Confirm the OTP.
What Is the Benefit of Mutual Fund Nomination?
Nomination allows a mutual fund investor to select a person who will inherit their mutual fund units in the event of their demise, with the flexibility to choose a family member or close relative.
However, if an investor chooses to opt out of nomination, it means they have decided not to appoint a nominee. In such cases, the investor’s legal heirs will be entitled to receive the mutual fund units in the event of their demise.
What Happens If You Miss the Mutual Fund Nomination Deadline?
If an individual mutual fund unit holder fails to nominate or opts out of nomination by September 30, 2023, their mutual fund folios will be frozen for debit transactions. As a result, they won’t be able to redeem their mutual fund units or make changes to their investment portfolios.