SEBI Eases Nomination Rules: Online Aadhaar e-Sign Now Allowed

The Securities and Exchange Board of India (SEBI) has introduced significant changes to nomination rules for demat accounts and mutual fund folios, aiming to streamline the process and tackle the growing issue of unclaimed assets. These updated regulations will come into effect from September 1, 2026.

Under the new framework, investors opening single-holder demat accounts or mutual fund folios will be required to either provide a nomination or explicitly opt out. This measure is intended to ensure that investments are easily transferred to family members in the event of an investor's passing.

The nomination process has been considerably simplified. Investors can now appoint up to three nominees and complete the entire procedure online. Accepted methods include Aadhaar e-sign, OTP authentication, or digital signatures. For physical forms, witness signatures will no longer be necessary unless the investor uses a thumb impression.

Furthermore, SEBI has reduced the amount of information required from investors. Only the nominee's name and their relationship to the investor are mandatory fields. Details like PAN, Aadhaar, phone number, and email address are now optional. This simplification follows feedback from market intermediaries and investors regarding operational challenges with previous rules.

To address the issue of non-nil accounts, SEBI has also mandated brokers, depositories, and mutual fund registrars to proactively remind investors who have not yet provided nomination details. These reminders will be sent via SMS, emails, and app pop-ups, encouraging more investors to complete this crucial step.