SEBI Extends the Deadline for Mutual Fund Nominee Updation

The market regulator Securities Exchange Board of India (SEBI) has extended the deadline for Nominee Updation to September 30, 2023 for mutual fund investors.

Erstwhile, SEBI required mutual fund subscribers to submit nomination data or a declaration to opt out of nomination by March 31, 2023. This deadline has been extended, and mutual fund investors with existing mutual fund folios, including jointly owned ones, now have until September 30 to name a beneficiary or opt out, failing which their folios will be frozen and they will be unable to redeem their investments.

In a circular dated on June 15, 2022, SEBI made the nomination mandatory for the existing mutual fund folios, including the jointly held ones by August 1, 2022. The deadline was later extended to October 1, 2022, and then, to March 31, 2023. It is mandatory for new mutual fund unit holders to submit either the nomination form or declare that they are opting out of the nomination.

However, on Tuesday through a circular dated March 28, 2023, SEBI announced that, "Based on representations received from the market participants, it has been decided that the provision mentioned at para 4 of SEBI circular dated June 15, 2022 with regard to freezing of folios, shall come into force with effect from September 30, 2023 instead of March 31, 2023.”

Under the new framework, Asset Management Companies (AMCs) and RTAs should encourage unit holders to fulfil the nomination requirement/or opt out of nomination by sending a communication to all such unit holders who are not in compliance with the nomination requirement on a fortnightly basis via emails and SMS. This communication will include instructions on how the unit holder(s) can nominate themselves or opt out of nomination.

Mutual fund investors, who already have submitted their nomination details, do not need to resubmit their nomination details.

In addition, as per the finance ministry’s statement, the deadline for linking PAN with Aadhaar has also been extended by 3 months to June 30, 2023 to enable individuals to comply with the mandatory income tax provisions.

To know more about the ‘How to add nominee in mutual funds online’ you may read our article…Update Your Nominees for Mutual Funds by March 31st to Avoid Freezing Your Investments