Nomination is an important element in all investments that you make. The Securities and Exchange Board of India (SEBI), the financial market regulator, too has instructed all mutual fund houses to take steps to ensure that the nomination is in place for all mutual fund investments.
Investors subscribing to mutual fund units on or after August 1, 2022, will have a choice to either furnish their nominations or to opt out of a nomination by submitting a request to that effect.
The regulator has specified the format for effecting nomination as well as to opt out. The mutual fund houses are directed to offer online as well as offline (physical) facility to the mutual fund investors to either submit their nomination requests or to declare their intention to opt out of the nomination. The investors can submit their nominations by filling up the form and submitting it to the fund houses or the registrar and transfer agents. The investors who are keen to opt out of the nomination have to do so by following the same process by using the specified format. In case the investor is keen to complete the process online, then the person can either use an e-Sign or can send the fund house a scanned copy of the duly signed format applicable.
All existing mutual fund folios held in a single name or jointly need to have a nominee or an explicit opting-out declaration. The fund houses are told to get this done by March 31, 2023. Mutual fund folios without nomination or an opting-out declaration will be frozen and investors cannot sell their units in such folios. If your folio does not have a nominee nor you have opted out of nomination, it is better to approach the fund house and exercise your choice, to ensure that your folios do not get frozen after the deadline.Jointly held mutual fund folios and nomination are the best way to transmit a mutual fund investment, in case of the death of a mutual fund investor.