SEBI Changes Demat, Mutual Fund Nomination Rules; Here's What Will Change From Sept 1

The Securities and Exchange Board of India (SEBI) has introduced a new nomination framework for demat accounts and mutual fund folios, allowing investors to complete the process with fewer requirements from September 1, 2026.

Under the new rules, investors opening a single-holder demat account or mutual fund folio will have to either name a nominee or officially choose not to add one. However, adding a nominee will remain optional for jointly held accounts and folios.

The changes follow feedback from industry players who said the earlier nomination rules were difficult to implement.

What Changes For Investors?

The revised framework requires investors to provide only basic information while adding a nominee. The nominee's name and relationship with the investor will be mandatory, while the date of birth will be required in the case of a minor nominee.

Details such as Aadhaar, Permanent Account Number (PAN), passport information, mobile number and email address will remain optional.

The regulator has also removed the requirement for a witness signature in most cases. Investors using a regular signature will no longer need a witness while filing nomination forms. A witness will be required only when a thumb impression is used.

Investors can continue to appoint up to three nominees. If multiple nominees are named and no percentage share is specified, the investment will be divided equally among them.

SEBI has also expanded digital options for filing nominations. Investors will be able to complete the process online using Aadhaar-based e-sign, digital signatures, recognised e-sign facilities or two-factor authentication through a one-time password sent to their registered mobile number and email address.

Focus on Unclaimed Assets

The regulator has directed depositories, mutual fund registrars, depository participants and asset management companies to offer both online and offline nomination facilities.

Investors will also be free to modify or cancel nominations any number of times. Meanwhile, to encourage more people to update nomination details, intermediaries will send SMS and email reminders twice a year to investors who have neither nominated a beneficiary nor opted out.

Online investment platforms will also display pop-up messages explaining the benefits of adding a nominee whenever such investors log in.

SEBI said these measures are aimed at reducing the number of securities and mutual fund units that remain unclaimed after an investor's death. The regulator has repeatedly expressed concern over rising unclaimed financial assets and wants to ensure investments pass more smoothly to legal heirs and nominees.

The revised rules replace earlier nomination-related circulars and will take effect from September 1, 2026, giving market intermediaries time to update their systems and processes.