SEBI Nomination Rules 2026 for Mutual Funds and Demat Accounts: What Investors Must Do Before September

The Securities and Exchange Board of India (SEBI) has issued revised nomination rules for demat accounts and mutual fund folios, effective from September 1, 2026. Under the new framework, single-holder investors opening new demat accounts or mutual fund folios must either nominate a beneficiary or formally opt out of nomination. The changes are designed to reduce unclaimed financial assets in India, simplify the nomination process, and give investors more flexibility. Here is what every investor needs to know and do before the September 1 deadline.

What the New Rules Require

From September 1, 2026, every new single-holder demat account or mutual fund folio must have a nomination on record or a formal declaration opting out. This is a mandatory requirement: investors cannot simply leave the nomination field blank. For existing accounts, SEBI has been progressively tightening compliance requirements, and investors with older accounts that lack nominations should update their records to avoid potential complications in transmission of assets upon death. For jointly held accounts and mutual fund folios, nomination remains optional.

Simplified Information Requirements

Under the revised framework, the only mandatory details for a nominee are the nominee's name and relationship with the investor. If the nominee is a minor, the date of birth must also be provided. Identification details such as PAN, Aadhaar, passport numbers, email address, and mobile number are now optional, not mandatory. This is a significant reduction in paperwork from the earlier requirements that demanded extensive identification details for every nominee. SEBI has also removed the requirement for a witness signature on nomination forms submitted with a regular signature. A witness will now be required only when the investor uses a thumb impression instead of a signature.

Multiple Nominees and Flexibility

Investors can now appoint up to three nominees for a single demat account or mutual fund folio and assign specific percentage shares to each nominee. The revised framework also allows investors to modify, update, or cancel nominations any number of times without restriction. This flexibility is important for investors whose family circumstances change over time, whether through marriage, divorce, birth of children, or death of an existing nominee.

Digital Nomination Options

Investors can complete the entire nomination process online. The accepted methods include digital signature certificates, Aadhaar-based e-sign, recognised electronic signature facilities, and two-factor authentication using OTP verification on registered mobile numbers and email IDs. This digital pathway is particularly important for investors who hold accounts with brokers and AMCs in different cities. The entire process, from adding a nominee to modifying an existing nomination, can be done without physical paperwork.

Why Nomination Matters: The Unclaimed Assets Problem

India has a significant problem with unclaimed financial assets. According to reports, over Rs 1 lakh crore in financial assets remain unclaimed across banks, insurance companies, and securities market intermediaries. When an investor dies without a nomination, the legal heirs must go through a time-consuming and expensive succession certificate or probate process to claim the assets. A valid nomination allows for a much simpler and faster transmission of assets to the nominee, who holds the assets in trust for the legal heirs. While nomination does not override a Will or the laws of succession, it dramatically simplifies the immediate transfer process.

Key Takeaways

From September 1, 2026, all new single-holder demat accounts and mutual fund folios must have a nomination or a formal opt-out declaration. Only the nominee's name and relationship are mandatory; PAN, Aadhaar, and other identification details are optional. Investors can appoint up to three nominees per account and modify nominations unlimited times. The process can be completed entirely online using digital signatures, Aadhaar e-sign, or OTP verification. For jointly held accounts, nomination remains optional. Nomination does not replace a Will but simplifies the immediate transmission of financial assets upon the investor's death. Investors with existing accounts should review and update their nominations before the September 1 deadline.