The Securities and Exchange Board of India (SEBI) has proposed changes to nomination norms for demat accounts and mutual fund folios, aiming to simplify investor onboarding and bring processes in line with banking standards.
In a consultation paper released on March 17, the market regulator suggested making nomination the default option for all single-holder accounts and folios opened after a specified date. Investors who do not wish to nominate will be required to explicitly opt out.
According to the proposal, investors choosing to opt out will be shown a pop-up message outlining the benefits of nomination and will need to provide consent to proceed without adding a nominee. The move is aimed at reducing the number of unclaimed assets.
SEBI has also proposed simplifying nominee details by making only the nominee’s name and relationship with the investor mandatory. Other details such as address, mobile number, email ID, and percentage share are proposed to be optional. In cases where the share is not specified, the assets will be distributed equally among nominees.
The regulator has further suggested capping the number of nominees at four, aligning it with banking norms. This is a revision from the earlier proposal of allowing up to ten nominees. SEBI noted that data indicated very few investors opted for multiple nominees, and a higher limit could create operational challenges.
However, the maximum number of joint holders in an account will continue to remain three.
The consultation paper also addressed concerns regarding nominee access during an investor’s lifetime. SEBI clarified that nominees act as trustees only after the investor’s demise. For cases involving incapacitation, the regulator has proposed continuing with the existing Power of Attorney mechanism instead of granting operational rights to nominees.
SEBI has invited public comments on the proposals until April 7, 2026.
-ANI
