The deadline for Mutual Fund (MF) nomination updates, which is set for September 30, 2023, is fast approaching, and there is still a significant number of PAN holders who have not completed this task. According to records from the registrar and transfer agent (RTA) CAMS, over 2.5 million PAN card holders have not yet updated their nomination details. If data from the other RTA, KFinetch, were included, the number would likely be even higher, although KFintech has not responded to inquiries regarding this matter.
This issue is particularly significant because many of these PAN holders likely have investments in multiple MF schemes, compounding the problem.
Failure to update the nomination by the deadline will result in the freezing of MF folios for all debit transactions. This means that affected investors will be unable to redeem or withdraw funds from their investments. However, they can still continue to invest in their existing folios.
To address the challenges faced by investors in updating their nominations, the Securities and Exchange Board of India (SEBI) extended the original deadline from March 30, 2023, to the current September 30, 2023.
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One of the primary obstacles faced by investors is related to jointly-held MF folios, where investments are in the names of multiple individuals. Updating the nomination for such folios, whether online or through physical forms, requires the consent of all joint holders. This is dependent on OTP-based authentication, which necessitates having contact details (email ID and mobile number) for all joint holders. If these details are missing, physical nomination forms must be submitted.
The issue is further exacerbated by the historical practice of only providing contact details for one of the joint holders during the initial investment process, resulting in missing information in old MF investments.
In some cases, signature mismatches and inactive mobile and email IDs have also caused problems when updating nominations. Senior citizens may face challenges due to signature changes over time, and individuals without email IDs may struggle with two-factor authentication requirements.
Practical problems such as changing email IDs or mobile numbers can also hinder the process. Additionally, NRI investors may face difficulties due to the absence of an active Indian mobile number.
Investors facing these challenges have two options for updating nominations: online and offline. If online updating is not possible, hard copies of the nomination form must be submitted.
Investors with investments in a single fund house can download the form from the respective fund house’s website or the relevant RTA website. Those with investments across multiple fund houses can download nomination forms from the relevant RTA websites for simplicity and then submit them to the RTAs or individual fund houses.
With the September 30 deadline approaching, investors with pending nominations should act swiftly to avoid frozen folios. Whether the deadline will be extended again remains uncertain, but some experts believe that an extension may be necessary to accommodate retail investors.
