Nomination May Become Default Under SEBI’s New Proposal

Securities and Exchange Board of India (SEBI) wants to make nomination rules much simpler for demat accounts and mutual funds.

The move is aimed at easing the investment process and addressing the growing issue of unclaimed assets.

What Is Changing?

Right now, as per the process, investors have to actively add a nominee. But as per SEBI’s new proposal, nomination could become the default option. That means:

• All new accounts will automatically have a nominee

• If an investor doesn’t want one, they’ll have to specifically opt out

Earlier, opting out needed verification steps like OTPs and, in some cases, even video confirmation. But now, it may just require a simple declaration.

The proposal comes in response to low adoption rates. According to SEBI, more than 70% of new investors in 2025 did not register a nominee.

Reduced Documentation Requirements

SEBI has also proposed cutting down the amount of information investors need to fill out to add a nominee. Under the revised proposal, only basic details such as the nominee’s name and relationship with the account holder would be mandatory. Everything else, like address, email, phone number, etc., becomes optional.

In cases where multiple nominees are added but no specific allocation is mentioned, the assets will be distributed equally among them by default.

Maximum Nominees Reduced To Four

Earlier, SEBI had proposed adding up to 10 nominees to an account. But now, plans are to limit it to 4 nominees, which is similar to banking rules.

At the same time, the number of joint account holders will stay the same at 3.

Clarification on Nominee Rights

Another thing SEBI has clarified is the confusion about whether nominees could operate accounts if something happened to the account holder. Nominees will not have the authority to operate or manage an account during the account holder’s lifetime.

Access to the assets will be granted only after the account holder’s death. For account management during an investor’s lifetime, the existing Power of Attorney framework will continue to apply.

Also Read: SBI Secures ₹6,051 Crore Via Tier 2 Bonds At Higher Yield

What’s Ahead?

A major reason behind all these changes is to reduce unclaimed assets. When there’s no nominee, it becomes difficult for families to claim investments later. By making nominations simple and automatic, SEBI wants to ensure your money easily goes to the legal heirs.

SEBI released this proposal on 17 March 2026 and is asking for feedback from stakeholders. After that, the final rules will be decided.

Sources:

ET

Live Mint