As of March 1, 2025, SEBI has planned a big update in the way mutual fund and demat account nominations are handled. These changes are for ensuring that assets reach the right people more efficiently, reducing assets that are not claimed and making sure the nomination process is more friendly for investors. Let us look into the new SEBI guidelines to see how they affect investors, nominees and financial institutions.
What Has Changed?
With the recent updates, investors have the chance to choose 10 individuals for their mutual fund or demat accounts. Earlier, nominees was very few, so when someone was dead or didn’t sort out their finances, there were often legal and financial disputes. Key features include:
| Feature | Details |
| Effective Date | March 1, 2025 |
| Maximum Nominees Allowed | 10 per mutual fund or demat account |
| Who Can Nominate? | Only the investor themselves (PoA holders not allowed) |
| Nominee Details Required | PAN, last 4 digits of Aadhaar, or driving license number |
| Submission Modes | Online (e-sign/digital signature) and Offline |
| Nominee Account Options | Joint or individual holdings of nominee shares |
| Record Retention by Institutions | 8 years after the account transfer |
Enhanced Security and Identity Verification
To strengthen the transparency and authenticity of nominations, SEBI now mandates that all nominees must provide identity proof. This is expected to streamline the verification process and reduce fraud or disputes related to false claims on investments. Acceptable ID details include:
- PAN (Permanent Account Number)
- Aadhaar (last four digits only)
- Driving license number
Also read: Top Hybrid Mutual Funds in India to Keep on Your Radar in 2025
No More Power of Attorney-Based Nominations
One of the biggest changes in the new guidelines is that PoAs can no longer make appointments for investors. The account holder has to execute the nomination themselves. The change means that the investor decides the choice, and no one else can take advantage of their authority.
What happens if the Investor dies?
SEBI has simplified the process for transferring assets to nominees in the unfortunate event of an investor’s demise. Here’s what’s required:
Documents for Asset Transmission:
- A self-attested copy of the death certificate
- Updated KYC (Know Your Customer) documents of the nominee(s)
- A discharge form from creditors, if applicable
Those who inherit a mutual fund or demat account may handle it together or choose to make it separate in their names. Because of this flexibility, it is easier to plan and give out money to the legal heirs.
Support for Incapacitated Investors
To address practical problems, SEBI has also looked at situations where an investor’s health problems make it difficult for them to make financial decisions. To make the process consistent, SEBI has told mutual fund companies and depositories to set a Standard Operating Procedure (SOP) for managing these tasks. In those situations, you need to act:
- Investor nominees are authorised to look after the investor’s account matters.
- The validation process requires using thumb impressions or other guaranteed marks in person.
- When a withdrawal is made, it can only be sent to the investor’s account that has been verified.
How to Submit Nominations?
SEBI offers both online and offline submission options for investor convenience.
- Online Submission:
- Through AMC portals or depository participant websites
- Requires Aadhaar-based e-signature or a valid digital signature
- Offline Submission:
- Physical nomination forms can be submitted to the mutual fund house or depository
- Signature and identity verification will still be necessary
- This dual method ensures accessibility for all investors, whether they are digitally savvy or prefer traditional paperwork.
Why Are These Guidelines Important?
Reducing the amount of unclaimed money in the financial system is the main reason for SEBI’s initiative. Every year, numerous investments are left unclaimed because there is no identification of a beneficiary or because of administrative slowdowns when changing ownership. How will the rules be different?
- People who invest should actively plan for future challenges that may affect their investments.
- With nominees or legal heirs, someone is often able to get the money or assets much faster.
- People can follow money movements with more clarity.
Final Thoughts
The new nomination rules by SEBI ensure investors are safe and that while nominating someone for their assets, the process is now more well-regulated. It is very important for you, as a mutual fund investor, to look at your existing votes, update the correct information and check for new updates before March 1, 2025.
Written by Promita Ghosal
