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MF Utility (MFU) recently held a webinar to simplify the new nomination guidelines. Ganesh Ram, MD & CEO, MFU and Sunil Nair, COO, MFU touched upon the regulatory changes and addressed some of the most common MFD questions.
Here are the key highlights of the webinar.
What are the new nomination regulations?
Investors subscribing to mutual fund units on or after October 1, 2022 should provide nomination in the prescribed format or opt out of nomination through a signed declaration form.
Physical forms should carry the wet signature of all unit holders and online forms should be validated using e-Sign facility or 2 factor authentication (2FA).
Also, existing investors holding mutual fund units (solely/jointly) should opt for or out of nomination by March 31, 2023. Non-complying folios will be frozen for redemption.
What is the process for new common account numbers (CANs)?
For eCAN registration initiated on or after October 1, 2022, investors can validate ‘nominee registration’ or ‘opt-out’ option through OTP based 2FA collected from all common account numbers (CAN) holders(s). The given nomination will get updated to all mapped folios.
What is the revised process for ‘new folio subscription’ in existing CANs on MFU?
For creating new folios, all CANs registered before October 1, 2022 will be classified as ‘nominee validated’ or ‘nominee not validated’. MFU will notify in the subscription screen if the entered CAN is classified as ‘nominee not validated’.
Here are the different scenarios:
The online platform will allow all transactions in ‘nominee validated CANs’, however, it will not allow ‘new folio subscriptions’ in ‘nominee not validated’ unless investors follow the defined process.
Step-by-step guide
MFDs and their clients can place transactions in existing folio(s) (whether the nominee is validated or not), however, new folio transactions are subject to OTP (One Time Password) based 2FA (2Factor Authentication) collected from all CAN holders(s).
1 - Upon selecting ‘New Folio’ on transaction page, you will be routed to ‘Nominee’ section screen where the existing nominee in CAN will be displayed.
2 - If nominee is available in CAN, the system will prompt you to select the same nominee and trigger the validation link to CAN holder(s) to complete 2FA.
3 - If nominee is not available in CAN, the system will prompt you to select ‘Opt-Out’ option only and trigger the validation link to CAN holder(s) to complete 2FA.
4 - Once nominee validation is completed by all CAN holder(s) you can initiate orders in ‘New Folio’.
5 - Such validated nominee will be stored and used for all future ‘New Folio’ subscriptions until you submit a physical Nominee NCT (Non-Commercial Transaction) request to MFU.
Note - You cannot make changes to already existing nomination details. Also, in case the new folio request is submitted physically for ‘nominee not validated’ CAN, it is liable to be rejected at RTA.
What about Non-Commercial Transactions (NCTs)?
NCTs will be accepted in revised forms through physical mode only. On submission of valid NCT, nominee will be classified as validated (if not already) and will be updated across all mapped folios.
Is MFU expected to launch some more new features?
MFU operates based on CAN and currently offers CAN-based linkage i.e. it updates the same nomination across all folios mapped to that particular CAN. However, it is in talks with RTAs (Registrar and Transfer Agents) for providing folio-wise nomination facility.
Also, as and when RTAs/AMCs come up with the process for accepting online NCTs (2FA based), MFU will offer the same.
Subscription flow chart from October 1, 2022
Note - You can trigger/re-trigger the nomination verification process through ‘Nomination Verification’ option.
