Claiming a deceased loved one's mutual funds? Here's what SEBI has changed

In a bid to make the process smoother, the Securities and Exchange Board of India (SEBI) has asked the Association of Mutual Funds in India (AMFI) to simplify the industry's transmission norms. The revised standard operating procedure (SOP), which takes effect immediately, aims to make it easier for nominees and legal heirs to claim mutual fund units or proceeds.

"As an ongoing investor-friendly initiative, SEBI has advised AMFI to further simplify the standards on the 'Procedure to Claim Units/Proceeds upon death of a unit holder' to address operational challenges faced by kin of deceased investors during the transmission process for mutual funds," the market regulator said in a statement.

The changes, SEBI said, are intended to "facilitate ease of transmission" while aligning industry practices with its objective of safeguarding investors' interests.

Address mismatch no longer a major hurdle

One of the key changes concerns discrepancies between the address recorded in mutual fund records and the address submitted by the claimant. Under the revised norms, asset management companies (AMCs) can rely on the latest available address, provided relevant documents support it.

This is expected to reduce delays caused by outdated records, particularly where investors may have changed residences over the years without updating every mutual fund folio.

Common framework for name and signature issues

The revised norms also introduce a uniform approach for resolving name and signature mismatches.

Where there is a difference in the investor's name, claimants can submit self-certified identity documents such as Aadhaar or Passport. For signature discrepancies, AMCs can follow the framework already prescribed by SEBI for registrars and share transfer agents, depending on the nature of the mismatch.

Why it matters

In many cases, claims are delayed not because there is a dispute over ownership, but because of minor documentation inconsistencies. Investors may have changed their address, adopted a different signature over time or have slight variations in the spelling of their names across documents.

The revised SOP seeks to ensure that such routine issues do not become unnecessary obstacles for families trying to access investments after the death of a unit holder.

Uniform implementation across the industry

AMFI said the updated SOP has been shared with all member AMCs and is effective immediately.

What investors should do

While the revised norms are expected to reduce paperwork and delays, investors should continue to keep their KYC records and nomination details updated.