Demat account nomination: Because it is all about valuing what you have created and earned
consultation paper by Securities & Exchange Board of India (SEBI) points out that 70% of the demat accounts with a single holder have opted out of appointing a nominee. This observation from the Sebi has triggered a discussion about the importance of nomination in an investment. Let us understand why nomination in investments is important and how it can be done wisely:
The Sebi has been vocal about investors appointing a nominee to their investments or to clearly ‘opt out’ of the nomination if they are not keen to nominate anyone. In the past, the Sebi has stated that failing to mention a choice would lead to freezing of investments held in mutual fund folios as well as demat accounts. Deadline set for this exercise has already been extended three times and the revised deadline now is: June 30, 2024.
The statistics about demat accounts with a single holder opting out of nomination is a caveat for all stakeholders, which include investors as well as financial intermediaries. It has been observed that sometimes investors in a hurry to open a demat account online choose the option of ‘opt-out’ of nomination. Intermediaries need to educate investors at the time opening of account and also after the account opening about the need for nomination. In the case of the demise of an investor whose investments do not have nomination, the transmission of assets happens only when a probated Will, letter of administration or succession certificate is presented. This is a lengthy process. The survivors or legal heirs of the
