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Business News/ Mutual Funds / News/  Sebi extends deadline for MF account holders till Jan 1 to comply with nomination rule
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Sebi extends deadline for MF account holders till Jan 1 to comply with nomination rule

If MF account holders fail to comply with the norms their folios will be frozen, said the markets regulator

On 15 June 2022, the Sebi had made it mandatory for mutual fund holders to submit the nomination details or declaration to opt out of the nomination on or after 1 August, 2022. iStockphotoPremium
On 15 June 2022, the Sebi had made it mandatory for mutual fund holders to submit the nomination details or declaration to opt out of the nomination on or after 1 August, 2022. iStockphoto

The Securities and Exchange Board of India (Sebi) said the deadline for mutual fund account holders has been extended till January 1 to nominate a beneficiary or opt out of it by submitting a declaration form. 

If MF account holders fail to comply with the norms their folios will be frozen, said the markets regulator.

“Based on representations received from the market participants, it has been decided that the provision... about the freezing of folios, shall come into force with effect from January 1, 2024 instead of September 30, 2023," the Sebi said in a circular.

The markets regulator has also asked asset management companies (AMCs) and RTAs to encourage the unit holder to fulfill the requirement for nomination or opting out of the nomination by sending a communication on a fortnightly basis by way of emails and SMS to all such unit holders who is not in compliance with the requirement of nomination.

A report by news agency PTI citing market experts said that many mutual fund folios in the past have been opened without nominating anyone to whom the assets should be transmitted in case something happens to the account holders.

The move is aimed at helping investors to secure their assets and pass them on to their legal heirs.

Earlier, the deadline for existing mutual fund holders to provide a choice of nomination was September 30. 

On 15 June 2022, the Sebi had made it mandatory for mutual fund holders to submit the nomination details or declaration to opt out of the nomination on or after 1 August, 2022. Since then, the deadline has been extended several times.

On Tuesday, the Sebi extended the deadline by three months to December-end for existing demat account holders to provide a choice of nomination or formally opt out of nomination through a declaration form.

(With inputs from PTI)

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Updated: 27 Sep 2023, 10:38 PM IST
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