The Securities and Exchange Board of India (SEBI) has introduced revised nomination rules for demat accounts and mutual fund folios, making it mandatory for new single-holder investors to either name a beneficiary or formally declare their decision to opt out. These changes are set to take effect from September 1, 2026, and are part of a broader effort to simplify investment procedures and tackle the growing issue of unclaimed financial assets within the market.
Mandatory Nomination or Formal Opt-Out
Under the new framework, investors opening single-holder demat accounts or mutual fund folios after September 1, 2026, will be required to comply with the nomination rule. Those who prefer not to nominate a beneficiary must submit an explicit opt-out declaration. For jointly held accounts and mutual fund folios, however, the nomination process will remain optional, providing flexibility for co-investors while enhancing safeguards for individual account holders.
Simplified Nomination Process
SEBI has also streamlined the information required for filing a nomination. Investors will now only need to provide the nominee's name and their relationship to the investor. If the nominee is a minor, their date of birth will also be mandatory. Other details such as PAN, Aadhaar, passport information, email address, and mobile number will become optional. Investors have the flexibility to appoint up to three nominees for a single demat account or mutual fund folio. In cases where multiple nominees are registered without specified percentage allocations, holdings will be automatically distributed equally among all designated beneficiaries.
Reduced Paperwork and Enhanced Digital Options
In another investor-friendly move, SEBI has removed the requirement for a witness signature on nomination forms submitted with a regular signature. A witness will now only be necessary when an investor uses a thumb impression instead of a signature, significantly reducing paperwork and simplifying account-opening procedures.
To promote digital convenience, SEBI has expanded the methods for submitting nominations online. Investors can now utilize digital signature certificates, Aadhaar-based e-sign, recognized electronic signature facilities, or two-factor authentication via a one-time password sent to their registered mobile and email. Depositories, depository participants, mutual fund registrars, and asset management companies have been instructed to offer both online and offline nomination facilities to ensure accessibility for all investors.
Addressing Unclaimed Assets
A primary goal of these revised SEBI demat nomination rules is to curb the accumulation of unclaimed securities and mutual fund holdings. Intermediaries will be required to send SMS and email reminders twice a year to investors who have neither registered a nominee nor formally opted out. Additionally, online investment platforms will display pop-up messages highlighting the benefits of nomination when such investors log into their accounts. These measures are expected to facilitate smoother asset transfers to nominees or legal heirs, preventing assets from remaining unclaimed for extended periods. The new framework also allows investors to modify, update, or cancel nominations at any time.