SEBI nomination opt-out rule

Tue, 19 May 2026 00:00:00 +0000

SEBI’s nomination opt-out rule (effective 2022-2023) requires every Indian mutual fund investor to either provide a nominee or explicitly opt out via declaration. The framework was introduced to reduce the backlog of unclaimed folios that arise when investors pass away without nominees and legal heirs are unaware of the holdings (per MITRA forgotten folio data showing substantial industry-wide unclaimed balances).

Framework

Mandate

Per SEBI master circular on nomination:

All MF folios must have either:
- A nominated person, OR
- An explicit opt-out declaration.
Effective from 2022, with full implementation by mid-2023.

Trigger for action

Existing folios without nomination: investor must update.
New folios: nomination or opt-out at subscription.

Compliance window

Investors who fail to comply face restricted transactions (cannot redeem until nomination or opt-out completed).

Operational mechanics

Provide nominee

Submit nominee details via AMC / direct-plan platform.
Include nominee PAN, address, relationship.
Multiple nominees allowed with percentage allocation.

Opt out

Submit explicit declaration choosing not to nominate.
Acknowledges legal-heir succession via succession certificate / will.

Implications

For investors:

Sebi-Nomination-Opt-Out on WebNotes