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Having a nominee for your investments is of utmost importance. When it comes to mutual funds (MF), updating your nomination online is easy if the investment is in the name of a single investor. But when it comes to jointly-held MF investments, updating nomination via submission of a physical form may be the only way out.
Interestingly, Mario Sylvester Roche, COO of Domestic Fund Services at KFin Technologies, one of the two RTAs (registrar and transfer agents) for the Indian MF industry points out that transmission of MF units can be done completely online on MF Central, an MF platform backed by KFin Technologies and CAMS.
Here are a few points that Roche highlighted:
- Jointly-held MF investments – In case of demise of any investor, the surviving investors have the first right over the MF units. So, nomination is not necessary in a jointly-held MF investment. Also, until one year ago, when joint MF investments were made, the contact details of only the first holder were recorded. So, any change in nomination which requires the consent of all the joint holders and must be authenticated by OTPs cannot be done online. With a recent SEBI consultation paper talking of making nomination in jointly-held investments optional, there may not be a requirement to have a nominee in such investments even in the future, according to Roche.
- If investors in jointly-held investments want to have a nominee – This cannot be done online but only via submission of a physical nomination form. This is the industry practice.
- Is it possible to introduce tech changes that can facilitate jointly-held MF folios to update nomination online – We have the readiness for this at the back-end but implementation, though possible, will not be easy says Roche. Also, with a SEBI circular expected (following the consultation paper on nomination), this may not be necessary. According to Roche, execution in terms of updating the mobile numbers / email IDs of all the joint holders, and creating awareness about this can take a lot of time.
- Process of transmission of MF units to the surviving family after an investor’s demise – There is a standardized process and documentation for this as laid down by AMFI guidelines for all mutual fund houses to follow. The transmission form can be downloaded from the AMFI, RTA or mutual fund house websites.
- Can transmission requests be made online – The process is completely online (scanned documents have to be submitted along with the transmission request) for the investor on MF Central for MF investments across all mutual fund houses.
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