There is going to be a big change in the rules related to mutual funds soon. It will be mandatory for investors who subscribe to mutual funds on or after October 1, to fill in the nomination details. Investors who do not want to fill the nomination details, they will have to fill a declaration, in which they will have to declare not to take the facility of nomination.
Asset Management Companies (AMCs) will have to provide the option of nomination form or declaration form in physical or online mode as per the requirement of the investor. Under the physical option, the form will have the investor’s signature, while in the online form, the investor will be able to use the e-sign facility.
If an Asset Management Company (AMC) wants to provide the facility of online submission to its customers, then its validation will have to be done through Two-Factor Authentication (2FA). One of these factors will be mandatory to have a One Time Password (OTP) sent to the customer’s registered mobile number or email.
This rule was to be effective from August 1
These new rules, which are being implemented from 1 October, were to be implemented from 1 August 2022, but in August this deadline was extended till 1 October 2022. In July, market regulator SEBI had stayed the implementation of rules related to nominee details for mutual fund holders. Due to which the mutual fund investors were not getting the option to nominate or come out of the nomination.
The nomination form or opt-out declaration form will be verified in two stages by the asset management companies. OTP will come on the registered e-mail or mobile phone number of the investor. Therefore, the investor should check his registered mobile number or e-mail once again.
SEBI has implemented this rule to bring uniformity in the rules related to all investment options of the security market. In 2021, SEBI had also provided such an option to investors opening new trading and demat accounts. Apart from this, SEBI had issued an operational circular for better regulation of the corporate bond market and to give access to all applicable rules to all issuers and other stakeholders at one place.
