- SEBI eases nomination rules for demat accounts and mutual fund folios from Sept 1, 2026
- Investors must nominate a beneficiary or formally opt out when opening single-holder accounts
- Nomination process simplified with online Aadhaar e-sign, OTP, digital signatures allowed
In a major relief for retail investors, the Securities and Exchange Board of India (SEBI) has eased the rules around nomination in demat accounts and mutual fund folios, aiming to reduce the growing pile of unclaimed shares and investments across the country.
Under the new framework, investors opening single-holder demat accounts or mutual fund folios from Sept. 1, 2026 will have to either nominate a beneficiary or formally opt out. SEBI said the move is designed to ensure that investments seamlessly reach family members in the event of an investor's death.
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The regulator has also simplified the process significantly. Investors can now appoint up to three nominees and complete the process entirely online through Aadhaar e-sign, OTP authentication or digital signatures. For physical forms, witness signatures will no longer be required unless the investor uses a thumb impression.
Importantly, SEBI has reduced the information burden on investors. Only the nominee's name and relationship with the investor are mandatory, while details such as PAN, Aadhaar, phone number and email address have been made optional.
The changes come after market intermediaries and investors flagged operational challenges with earlier nomination rules introduced last year. The regulator has now attempted to strike a balance between investor convenience and reducing the risk of financial assets remaining unclaimed.
The issue has become increasingly important as retail participation in Indian markets surges. Millions of first-time investors now hold shares and mutual funds digitally, but many accounts still do not carry nomination details.
In several cases, families face lengthy legal and documentation hurdles while trying to claim investments after the death of an account holder.
SEBI has also directed brokers, depositories and mutual fund registrars to regularly remind investors without nominees through SMS, emails and app pop-ups.
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