What is nomination in a mutual fund?
Nomination is the process of appointing a person to take care of your assets in the event of death. It is mandatory for new folios/accounts opened by an individual to make a nomination. In case investors do not wish to nominate, they can confirm it in the application form.
Why are investors in a hurry to provide nomination details in their old MF folios?
Investors are in a hurry after markets regulator Sebi announced that all existing and new investors will need to have a nomination for the mutual fund units held by them or opt out of the nomination facility altogether by the March 31 deadline. If a nomination is already there, no action is needed. For those holding units in demat form, the nominee for the demat account applies to your mutual fund holdings as well.
What happens if you do not make a nomination by March 31, 2023?
If you do not make a nomination in your existing folio, the folio will be frozen for debits. This means you will not be able to switch or redeem investments in your existing folios until you submit the relevant details.
How to make a nomination?
Completion of nomination can be done by filling a physical form signed by all holders, or can be done online through websites of the registrar and transfer agents. Mutual fund unitholders can submit their nomination or the choice to opt-out in the specified format either with the fund houses, registrar, or the transfer agents within the due date specified for the same. In case the mobile numbers or email IDs of the second holder are not updated with the fund house, investors may have to do it by filling a form only.
What are the benefits of registering a nomination?
When a nomination is registered, it helps facilitate easy transfer of funds to the nominee(s) in the event of the demise of an investor. In the absence of a nominee, the heirs/claimant will have to produce a host of documents like a will, legal heir Certificate, NOCs from other legal heirs etc. to get the units transferred in his/her name.
