Demat & mutual fund statements on DigiLocker soon? All you need to know about the SEBI proposal

Mutual fund units and shares worth crores of rupees remain unclaimed when investors fail to declare their nominees before passing away. A recent proposal by the Securities and Exchange Board of India (SEBI) will likely solve this problem.

The markets regulator has proposed using DigiLocker to access demat and mutual fund statements. This will make it easy for an investor's nominee declared on DigiLocker to get his/her mutual fund and demat account statements after the investor’s demise.

DigiLocker is a government-backed storage system that allows users to declare their nominees. Currently, financial documents related to bank accounts, insurance and the National Pension System (NPS) are available on DigiLocker.

If SEBI’s draft proposal is implemented, mutual fund statements and demat account details will also become available on DigiLocker.

How will the proposal work?

1. An investor will need to declare his/her nominees on DigiLocker along with their mobile numbers and email ids (over and above the nominees declared in the demat account and mutual fund folios)

2. Depositories and mutual funds would provide demat and MF holding statements of the investor to DigiLocker.

3. The investor's status on DigiLocker will be updated from either of the following sources:

• Data on the registration of deaths of the Registrar General of India
• KYC Registration Agencies (KRAs)

4. DigiLocker will automatically notify the nominee about the demise of the investor through SMS and e-mail.

5. Nominees can access the deceased investor's financial assets through their own DigiLocker accounts.

How will the proposal benefit investors?

As per the draft proposal, having mutual fund statements and demat account details on DigiLocker will ensure the smooth transfer of financial assets upon the investor’s demise.

"This will ensure that in case of demise of the user, notified to DigiLocker as contemplated in this circular, the DigiLocker nominee/s will get notified by the DigiLocker, thereby enabling the DigiLocker nominee/s to access the information about financial assets of the deceased user, and thereby help in initiating the transmission of deceased investor’s financial assets," SEBI said.

Why is this important?

Investments worth thousands of crores in shares and mutual funds are lying unclaimed. As of March 2023, shares worth more than ₹25,000 crore remained unclaimed, according to the Investor Education and Protection Fund data (IEPF) as reported by MoneyControl.

Similarly, the Association of Mutual Funds in India (AMFI) said in May last year that unclaimed dividends worth over ₹2,600 crore were lying with mutual fund houses.