31st March deadline for adding nominees to MF schemes. Investors stressed the mandate.

Investors hassles over MF nominations

MF portfolios by 31st March

In June 2022, the Securities and Exchange Board of India (SEBI) issued a circular asking mutual fund investors to add nominees to their portfolios. While investors didn't take heed of the mandate then, now they are in an uproar as the deadline is approaching.

SEBI had set a deadline of 31st March 2023 for nomination details, and the deadline is near. Here's what the regulator mandated and why investors are stressed about the same:

Mandate on nomination

SEBI has made it mandatory for mutual fund investors to add nominees to their portfolios. A nominee is an individual or entity entitled to receive the fund benefits if the investor passes away.

SEBI has asked investors to nominate an individual or entity for each folio. If you do not wish to add a nominee, you must opt out of the nomination specifically.

If you do not nominate nor opt out of the nomination by 31st March 2023, your folio will be frozen. You can only invest or redeem a frozen folio once you fulfil the mandate.

Related - Know what nomination is and its importance

Investors' hassles

As the deadline is approaching, investors are in a lurch. They are facing multiple issues in complying with the mandate. Have a look –

  • The online process of the nomination has its fair share of technical issues. Investors need to be able to complete the process smoothly.
  • If a joint account exists, i.e., two or more individuals are holding a folio jointly under either/or the survivor option, the online nomination is unavailable. They will have to complete the nomination process physically and offline. This would prove inconvenient, cumbersome, and time-consuming.
  • The online mode of adding nominees might only be available for some old folios done physically.
  • For the online process, the contact number of the folio owner should be available. The process is an OTP-based process where, if the contact number is unavailable or updated, the OTP will not be received, rendering the online process ineffective.
  • For NRIs or individuals travelling abroad, offline nominations might be problematic.
  • When doing online, you might only be able to choose some folios simultaneously. There might also be a limit on the number of OTPs which would create hassles and take time.
  • Different registrars have different processes for online and offline nominations. Holding multiple folios would mean completing different processes, making it cumbersome.

The nomination process, though stressful, is mandatory. So, understand the nomination process and complete it before the deadline to keep your account active.

Related - Find out how to invest in direct mutual funds

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