The Securities and Exchange Board of India (SEBI), a regulatory body, has made major changes in the rules related to nominees of mutual funds and demat accounts. The aim is to reduce the number of unclaimed assets and promote better management of investments. These will be useful in case of death or illness of the investor. SEBI has said that an investor can now appoint a maximum of 10 persons as nominees in demat accounts or mutual fund portfolios. This rule will be applicable from March 1, 2025. Let’s know more about this.

What is the rule?

According to a report by CNBC, the investor will have to declare a nominee. This cannot be done by the investor’s power of attorney holders. Nominees can either remain joint account holders with other nominees or open separate single accounts or folios for their respective shares.

What documents are required to transfer assets to a nominee?

•  Self-attested copy of death certificate of deceased investor
•  KYC of nominee must be complete, updated and re-verified.
• Due discharge of creditors

Details to be provided by investors

According to the new guidelines, investors will now have to provide more information about their nominees. This includes identifying details. For example, the nominee’s PAN, driving license number or the last four digits of his Aadhaar number. Apart from this, investors will have to provide the contact details of the nominee and how they are related to you.

How to update nominee?

The nomination form can be submitted both online and offline. For online submission, institutions will accept nominations submitted through digital signature certificate or Aadhaar based electronic signatures. Apart from this, investors will get a receipt after submitting each nomination. This will ensure transparency in the entire process. Regulated institutions are required to maintain records of nominees and receipts for a period of eight years after the transfer of an account or folio.

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After receiving the application, the mutual fund company will have to complete this process within two days (T+2). This will help investors avoid penalties and other financial troubles. The new rule has been implemented.

Earlier, this was the process

Earlier, investors had to apply 10 working days in advance to cancel SIP. It was difficult to correctly estimate the status of the bank account in such a long time, due to which the installment often bounced. Due to this, investors had to pay additional charges like ECS or mandate return charges. SEBI has simplified the cancellation process to solve this problem. The new rule will apply to both online and offline SIPs.

Think of the new process as

Suppose an investor’s SIP installment is on the 10th of every month. In some month, there is not enough money in his account till the 7th. In such a situation, he can request to stop or close the SIP on the 7th. The mutual fund company has to cancel it before the 10th. In the meantime, no penalty will be imposed on the investor.

Instructions to mutual fund companies

1. Companies will now have to cancel auto-debit or ECS instructions within two working days.

2. The investor needs to be informed in case of missing the SIP installment for the first time.

3. The investor must be informed that if he misses paying the installment for three consecutive times then the SIP will be stopped completely.

4. Information regarding cancellation of SIP will have to be given to the investor by sending a message.

5. SIP cancellation option must be made available on all platforms.

Big relief for investors

This decision of SEBI is being considered a big step towards transparency in the mutual fund industry and strengthening the rights of investors. Experts say that this new rule will be a big benefit for SIP investors. Now they will not have to fear fines and they will be able to have better control over their investments. This step will not only increase the convenience of investors but will also help them in financial planning.

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There is going to be a big change in the Indian Mutual Fund Market (MF Market). The Securities and Exchange Board of India (SEBI) has proposed performance-based charging of fund managers i.e. fund managers will be able to charge investors based on the performance of the fund.

According to the information, a decision can be taken on this soon. At present, a certain percentage is charged as fee based on the size and assets under management (AUM) of different types of schemes.

SEBI is preparing to introduce a new category of mutual fund schemes with performance linked fees. This is because many actively managed mutual funds have failed to beat their benchmark indices. According to experts, Sebi’s proposal is similar to the fee structure for portfolio management services, under which mutual funds will be able to collect upfront fees. Portfolio Management Services is a professional financial service where the equity portfolio is managed by skilled portfolio managers and stock market professionals with the help of a research team.

Experts believe that this new rule is being prepared keeping in mind the investors, which can prove to be effective in giving higher returns. According to him, SEBI has been making changes in the investment rules for some time to benefit the investors. This new proposal seems to be correct considering the current circumstances as some mutual fund schemes have performed poorly in the long term while some have given better returns than top PMS schemes. This initiative of SEBI will encourage the fund managers to generate better returns for the investors.

Tts negative side

However, there are downsides to this proposed divergence as well. Experts said there is every possibility that fund managers may take undue risk to generate higher returns for investors and increase their fund’s fees. Its bad effect can affect investors. Along with this, he said that investors may find it difficult to understand such a fee structure. This may lead to confusion, which may reduce investor participation.

It is important to carefully consider the potential risks and benefits before deciding to invest in such a fee-charging fund. It will also become necessary for investors to carefully evaluate the track record and investment strategy of the fund manager.

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Now investors will be able to complete the nomination work by September 30, 2023. Earlier, the deadline for nomination was ending on March 31. SEBI had issued a circular in July 2022 informing that in case of non-completion of nomination by March 31, investors may suffer huge losses.

Complete the nomination work by September 30, 2023

SEBI issued a notification on March 28, 2023, telling mutual fund investors that as per the circular in June and July 2022, the deadline for completion of nomination in all single and joint mutual funds was March 31, 2023, which has now been extended to September 30. Is. Now investors will get time till September, 2023 to complete the nomination work. In case of not doing so, the account will be frozen. Along with this, SEBI has also extended the nomination deadline for demat and trading accounts to 30 September.

Actually, SEBI is insisting on mutual fund investors to complete the nomination because if a mutual fund investor dies before the maturity of the scheme, then in such a situation there is no way to transfer his assets to someone else. Don’t be in trouble

How to add nominee in mutual fund?

You can do the work of mutual fund nomination both online and offline.
To complete the nomination through online mode, visit the official website of your mutual fund.
Here you will see the option to add nomination. By clicking on this, complete the work of nomination.

PAN Aadhaar linking deadline extended

On Tuesday, the central government also extended the deadline for linking PAN with Aadhaar. Now taxpayers will be able to link their PAN with Aadhaar till June 30, 2023. To give information on this matter, the Finance Ministry issued a press release saying that in order to give taxpayers a little more time, the deadline for linking PAN and Aadhaar has been extended from March 31 to June 30, 2023.

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