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A white paper titled ‘Reimagining Nominations: Making Succession Smoother and Simpler’ released by (Association of Registered Investment Advisers) ARIA shows that the Indian MF industry has unclaimed amount of Rs.24,000 crore in FY 2021.
The white paper talks about the current nomination process and recommends a few measures to make nomination process simpler.
It suggests that the industry should do away with the requirement of obtaining attested signature of nominees.
The white paper proposes changes that SEBI/AMFI can consider for making succession smooth and simple.
- Easy, uniform and simple process to check nomination status and make/change nominees
- Simple, common nomination form/e-form across financial assets
- Any number of nominees
- Successive nominees
- Single scrip/folio/security level nominations
- Mandating comprehensive e-nomination facilities, especially within the website or mobile apps of providers facilitating financial transactions
- Option for completing/updating KYC of nominees at any time
- Extending nomination facilities for addressing situations of incapacitated financial consumer
- Minors as nominees (with or without specifying an adult or guardian during the minority of the nominees) - Ability to defer the age of vesting (as regards minor nominees)
- Mandating nominations for all financial assets (including in respect of legacy financial assets in a time bound manner)
- Centralised reporting of demise or incapacitation of a financial consumer + reliance upon the information reported and documents uploaded + triggering proactive outreach by financial services providers to the nominees
- Unclaimed funds and accumulations thereon that are earmarked for education, awareness or welfare of financial consumers should spread awareness and educate on advantages and benefits of nomination. On reimagined nomination facilities becoming operational, further awareness campaigns can also take place
The white paper also recommends elevating or equating nominees to being legal and beneficial owners of the financial asset (up to the percentage allocation as specified) instead of regarding nominees as trustees or custodians for legal heirs in respect of financial assets. This recommendation can be implemented by SEBI/AMFI and the parliament.
Pramod Rao has authored the white paper with inputs from ARIA.
