Sebi makes nomination optional for jointly held MF accounts

The capital markets regulator Securities and Exchange Board of India on Wednesday made the nomination optional for jointly-held mutual fund accounts in a bid to promote ease of doing business.
Sebi also allowed fund houses to have a single fund manager to oversee commodity and foreign investments which would lead to reduction in cost of managing the fund.

These decisions came after a group set by Sebi reviewed mutual fund regulations and recommended measures to promote the ease of doing business.

Following the recommendations, a public consulation was carried out and it was decided to make it optional for nomination in joint account mutual funds and permitting fund houses to have a single fund manager to oversee commodity and foreign investments.

“Accordingly, it has been decided that the requirement of nomination ….for mutual funds shall be optional for jointly held mutual fund folios,” the Securities and Exchange Board of India (Sebi) said in a circular.

Experts believe that the relaxation of nomination requirements for joint holders is beneficial as it simplifies the process of nomination by allowing the surviving member to become the nominee.

This streamlines the transmission process and reduces hassle in such situations. Later, the last surviving member can assign a nominee.
The regulator has set June 30, 2024,  as the deadline for all existing individual mutual fund holders to nominate or opt out of nomination. If they fail to comply, their accounts will be frozen for withdrawals.

In a separate circular, the regulator has eased the current provision with respect to dedicated fund managers.

Sebi said that for commodity-based funds such as Gold ETFs (exchange traded funds), Silver ETFs and other funds participating in the commodities market, the appointment of a dedicated fund manager would be optional. Also, the appointment of a dedicated fund manager for making the overseas investments would be optional.

The appointment of a single fund manager for domestic and overseas/commodity funds is intended to reduce the cost of managing the fund.

(With inputs from PTI)