Your Mutual Funds May Get Frozen

The Securities and Exchange Board of India (SEBI) has yet again changed the deadline for all existing individual holders of Demat accounts and mutual funds to designate a nominee. It is now June 30, 2024. If ignored, the consequences will lead to the freezing of their accounts. Earlier, the deadline for the same was December 31, 2023.

The submission of ‘choice of nomination’ for trading accounts has been made voluntary by the regulator to make it comfortable to do business. All existing individual holders of these accounts must take action to ensure smooth future access and inheritance.

What's at stake?

All eligible account holders must add a nominee. The nominee will be a designated person who will inherit the investor’s investments in the unfortunate event of his or her passing. This simplifies the transfer process for them, avoiding legal complications and delays during a difficult time.

Frozen accounts

SEBI has already extended the deadline four times due to its significance. Initially, the deadline was March 31, 2022, but it was extended to March 31, 2023, September 30, 2023, and the latest was December 31, 2023.

Delaying any further could lead to ‘Frozen accounts’. If you miss the deadline and haven't made a choice, your account might be frozen, preventing you from accessing your investments until you complete the necessary paperwork.

Why is the deadline so important?

• Legal hassles for your family: Without a nominee, your family might face a lengthy legal process to claim your investments, adding stress during tough times.
• Missed opportunities: A frozen account means your investments are stagnant, potentially missing market opportunities.

Adding a nominee is easy. Here's how to do it for your specific accounts

Demat account:

1. Visit the NSDL portal: https://eservices.nsdl.com/
2. Click on Nominate Online.
3. Enter your DP ID, client ID, PAN, and OTP.
4. Choose I wish to nominate and provide your nominee's details.
5. E-sign using the Aadhaar OTP.

Mutual Funds account:

• You can nominate at the start of your investment or later.
• Fill out the nomination form at the Investor Service Center or online with the Registrar of the Mutual Fund.
• You can nominate up to three people and specify their share of your investments.
• All unit holders must sign the form.

Remember:

• You can update your nomination details anytime if you do it before the deadline.
• If you hold mutual funds through a Demat account, the nominee details submitted for your Demat account will apply to your mutual funds as well.

Download the standard nomination form from the AMFI website: https://www.amfiindia.com/.

While adding a nominee is mandatory for demat and mutual fund accounts, it's optional for trading accounts. However, consider adding a nominee for these accounts as well to offer your family peace of mind and streamline the inheritance process.

There is an advantage. You can easily complete the nomination process online while sitting at home, making it a hassle-free process.

'Taking action now is crucial for protecting your investments and securing your family. Don’t let the deadline slip by.’