Sebi Simplifies Mutual Fund Transmission Process, Makes It Easier For Nominees And Legal Heirs To Claim Investments

The Securities and Exchange Board of India (Sebi) has simplified the process of claiming mutual fund investments after the death of an investor. The move is aimed at reducing paperwork and making it easier for nominees and legal heirs to get mutual fund units or redemption proceeds without unnecessary delays.

The changes have been introduced through the Association of Mutual Funds in India (Amfi), which has revised the industry standards for the "Procedure to Claim Units/Proceeds upon death of a unit holder" after Sebi's direction.

In a press release issued on July 17, Sebi said it had advised Amfi "to further simplify the standards on 'Procedure to Claim Units / Proceeds upon death of a unit holder' to address operational challenges faced by kin of deceased investors during transmission process for mutual funds."

The regulator said the revised standards are intended to "facilitate ease of transmission and align the practices with the regulatory objectives to safeguard investor interests."

The revised framework addresses some of the most common reasons for delays in transmission claims. In cases where the address in the mutual fund records does not match the address submitted by the claimant, asset management companies (AMCs) can now rely on the latest available address, provided it is supported by valid documents.

Sebi has also standardised the process for handling name and signature mismatches. AMCs can follow the same framework prescribed for Registrars to an Issue and Share Transfer Agents (RTAs).

For name mismatches, claimants can submit self-certified identity documents such as Aadhaar or Passport. In cases of signature mismatch, AMCs can follow the procedures laid down under the RTA framework, depending on the nature of the discrepancy.

The changes are aimed at removing some of the common hurdles that delay transmission claims, especially those arising from minor mismatches in investor records.

Sebi has also asked Amfi to train all entities involved in the transmission process to ensure the revised standards are implemented uniformly across the mutual fund industry.