Deceased investors’ nominees can access stock, MF holdings via DigiLocker from April 1. Here's how

SEBI's partnership with DigiLocker is aimed at reducing the burden of unclaimed assets.

Individual investors will soon be able to store and access information as well as statements of their demat and mutual fund holdings through government-backed digitised documents wallet DigiLocker. The move will not only help investors but also their nominees in passing on the holdings to rightful heirs on investors demise.

The Securities and Exchange Board of India (SEBI) has tied up with DigiLocker to prevent and reduce unclaimed investments. The platform allows users to electronically store critical documents such as Aadhaar, PAN, driving licence, bank account statements, insurance policy documents and NPS statements.

Here’s how the new mechanism, which comes into force from April 1, will work:

Auto access to nominees

In the case of an investor’s death, their nominees will be granted read-only access to the DigiLocker account, ensuring that essential financial information is easily accessible to legal heirs.

The nominee’s role is restricted to providing valid discharge to the fund houses, banks and others. These entities have to hand over the investment proceeds to the nominees who, in turn, pass it on to the legal heirs.

“By facilitating seamless access to financial records, this mechanism helps minimise unclaimed assets and ensures the identification of assets that might otherwise remain unnoticed,” the SEBI said.

The nominees can access the DigiLocker account and view the financial documents of the deceased investor after establishing their identities.

By fetching and downloading the holding statements via this platform, nominees can prevent the assets from being classified as unidentified unclaimed assets.

Nominees for the investments and Digilocker access can be different.

In such cases, the Digilocker nominee has to alert the scheme nominee or legal heirs regarding the investments, helping them to apply to the asset management company or depository participant for transmission of holdings.

Also read | SEBI’s new MF, demat nomination rules are a job well begun, but half done

The process

While storing their holdings in DigiLocker, investors will have to specify the nominee/s and be aware that they would be authorised to access the information on the investor’s death.

The investor must provide the mobile number and e-mail address of the nominees so that they can be notified about the investments to be claimed.

The tie-up with Digilocker will trigger an automated notification regarding investments to the nominees. “Upon notification of the user’s demise by KYC Registration Agencies (KRAs) — which are registered with and regulated by SEBI — the DigiLocker system will automatically notify the Data Access Nominees,” the SEBI note said.

KRAs would be responsible for verifying and triggering notifications regarding the holdings to nominees to enable a smooth transition process.

Also read | Solving the KYC mess: 5 steps that SEBI has taken to make things easy

According to the SEBI circular, DigiLocker will update the information about the investor’s death by accessing the register of deaths maintained by the Registrar General and Census Commissioner.

It will also rely on the death certificate of the investor available with the KRA system, which administers the centralised mechanism for reporting the demise of investors.

To access birth and death certificates, DigiLocker has API integration with the RGI’s Civil Registration System (CRS) portal. Users can fetch and store these certificates in their DigiLocker account.

“Further, a death certificate containing the Aadhaar number of the deceased alone can be uniquely identified by the DigiLocker system and the DigiLocker system will update the status of the user as deceased,” the SEBI said.

The markets regulator has directed all asset management companies (AMCs), their registrar and transfer agents (RTA) and recognised depositories to register with DigiLocker as issuers.

The aim is to enable investors to fetch their holding and transaction statements as well as the consolidated account statement that displays the status of all mutual fund holdings.