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MFDs have expedited the nomination declaration process to meet SEBI’s latest regulation of mandatory nomination. As per SEBI guidelines, all existing folios without nomination will have to opt for or out of nomination by March 31, 2023.
Cafemutual spoke to MFDs and various online platforms on this matter.
What challenges are MFDs facing?
MFDs unanimously shared that the nomination declaration process is time-consuming and laborious due to it being an offline process. Ritesh Sheth of Tejas Consultancy said, “Filling nomination forms, getting clients’ signature and then submitting it to respective fund houses or RTAs requires considerable time.”
To this, Sadashiv Phene added that it is challenging to get signatures of joint holders at the same time and requires multiple visits/follow-ups.
Paresh Shah spoke about the issue of signature mismatch. He said, “Signatures differ slightly over time. This poses operational challenges, especially in the case of 10-year-old folios.”
What do MFDs suggest?
MFDs are looking forward to the digitisation of the nomination declaration process. “There is a need for digital functionality that allows MFDs to initiate and investors to authenticate the nomination declaration,” said Paresh.
Ritesh believes that having a PAN-based centralised declaration could ease the process. He said, “Many investors keep same nominations across their portfolio. At least in such cases, there should be a relaxation from submitting separate declarations.”
Sadashiv added that the declaration process should be mandatory in the case of sole ownership only as joint holders usually exercise ‘either or survivor’ mode. This will take care of majority folios.
What can you expect from online platforms?
You can expect to hear some formal announcements soon.
Sreekanth Nadella, CEO, KFintech told Cafemutual that his company will soon launch an online facility to file nomination. He said, “We are in the last leg of ideation which will take care of digitalisation as well as enablement to make sure every folio has a nominee.” He added, “There are investors of all classes and some may not be that digitally savvy. We are thus looking at all three channels i.e. physical, phygital and digital.”
In the case of transaction platforms - Kiran Nandavadekar, Additional General Manager at BSE StAR MF, Sunil Nair, COO at MF Utilities India and Chetan Doshi, Vice President - NSE NMF Platform confirmed that they are currently working with AMCs/RTAs to define a convenient nomination declaration process for existing folios.
They also shared that functionalities to support nomination declaration (opt for or out) in the case of new folios will be live from October 1, 2022.
