The Securities and Exchange Board of India (Sebi) on Wednesday extended the deadline for mutual fund account holders to nominate a beneficiary or opt out of it by submitting a declaration form.
Earlier, the deadline for existing mutual fund holders to provide a choice of nomination was on or before September 30.
Failing to comply with the requirement of nomination will result in the folios being frozen for debits, SEBI said in a circular dated September 27.
The move is aimed at helping investors to secure their assets and pass them on to their legal heirs.
“Based on representations received from the market participants, it has been decided that the provision… about the freezing of folios, shall come into force with effect from January 1, 2024 instead of September 30, 2023,” Sebi said in a circular.
Mutual fund account holders now have time till December 31, 2023, to submit the nomination details or declaration to opt out of the nomination.
Further, Sebi asked asset management companies (AMCs) and RTAs to encourage the unit holder to fulfill the requirement for nomination/ opting out of the nomination by sending a communication on a fortnightly basis by way of emails and SMS to all such unit holders who is not in compliance with the requirement of nomination.
The deadline has been extended several times.
Market experts are of the view that many mutual fund folios in the past have been opened without nominating anyone to whom the assets should be transmitted in case something happens to the account holders.
This means that the rightful heirs had difficulty in getting the assets transmitted to them due to the hassles of different kinds of documentation requirements.
SEBI has also extended the deadline by three months to December-end for existing demat account holders to provide a choice of nomination or formally opt out of nomination through a declaration form.
Additionally, the submission of ‘choice of nomination’ for trading accounts has been made voluntary by Sebi as a move towards ease of doing business.
(With PTI inputs)