The deadline for your mutual fund folio to get frozen is near provided proper nomination is not done in the account. Investors in international funds or other mutual fund schemes must ensure that they have taken the necessary action regards the new SEBI rule on nominations. The last date for completing the nomination process is September 30.
On June 15, 2022, and subsequently on July 29, 2022, the SEBI prescribed the requirement for nomination or opting out of nomination for all the existing individual unit holders holding mutual fund units either solely or jointly, by March 31, 2023, failing which the folios shall be frozen for debits. On March 28, 2023, SEBI postponed the deadline for the freezing of folios to September 30, 2023 instead of March 31, 2023.
SEBI’s March 28 circular reads – “It has been decided that the provision mentioned at para 4 of SEBI circular dated June 15, 2022 with regard to freezing of folios, shall come into force with effect from September 30, 2023 instead of March 31, 2023.
AMCs and RTAs were asked to encourage the unit holder to fulfill the requirement for nomination/opting out of the nomination by sending a communication on a fortnightly basis by way of emails and SMS to all such unit holder(s)who are not in compliance with the requirement of nomination.
In the case of new MF investors, providing nomination or opting-out confirmation has already been mandated for folios created after October 1, 2022. Nomination in folios held by investors that were created before to 01-Oct-2022 must be completed on or before 30-Sep-2023 by submitting nominee details or making an Opt-out declaration.
The AMC offers the unit holder(s) with the option of submitting either the nomination form or the declaration form for opting out of the nomination in physical or online form, as desired by the unit holder(s). In the case of a physical option, the forms must have the wet signatures of all unit holders; in the case of an online option, the forms must use the e-Sign capability authorized by the Information Technology Act of 2000, rather than the wet signatures of all unit holders. However, one needs to ensure that their contact details such as email IDs and mobile numbers are updated in their fund folios.
To complete nomination/opt-out process, rather than browsing various mutual fund websites, you may visit the Karvy (KFintech) or CAMS website. There you can submit nominee details / opt-out declaration using OTP / e-Sign based process. Alternatively, you may submit the duly filled and signed physical form at any of CAMS investor service centres or Karvy (Kfintech) center.
Nomination is a facility that allows an individual unitholder (including a sole proprietor of a sole proprietary concern) to nominate a person to claim the unitholder’s Units or redemption profits in the case of the unitholder’s death.
If the Units are held jointly by more than one person, all joint unit holders must mutually nominate a person to whom all rights in the Units would pass if all joint unit holders died.