New SEBI rules allow three nominees for your mutual funds

The Essentials

• SEBI has updated its regulations to make adding or opting out of nominations mandatory for single demat and mutual fund accounts.
• Investors can now assign up to three different nominees and specify the exact percentage share each person receives.
• You no longer need a witness to sign physical forms, removing a major hurdle for securing your financial legacy.

The Pulse

Single demat and mutual fund accounts opened from September 2026 will legally require you to either declare a nominee or explicitly opt out. The market regulator has reviewed its previous directives and removed several operational friction points that frustrated investors. You can now complete the entire process online using a simple one-time password or an Aadhaar e-sign.

What happens if you already have an active account without a nominee? Your depository participant or mutual fund registrar will start sending you bi-annual email and text nudges, alongside daily login pop-ups, until you update your preference. Joint account holders get a slight reprieve, as the nomination remains strictly optional for them.

The underlying goal is to stop the mounting crisis of unclaimed assets tied up in the Indian financial system. By forcing a clear yes or no at the onboarding stage, the regulator ensures legal heirs will not have to chase court documents to access their rightful wealth.

The Snapshot

The Big Picture

The broader push to clean up India’s financial plumbing is accelerating. We are seeing a coordinated effort across institutions to fix the generational wealth transfer problem, where thousands of crores sit unclaimed in forgotten bank accounts and provident funds. Just as the Reserve Bank of India launched the UDGAM portal to help families track down lost deposits, SEBI is shutting the door on future orphaned assets. By making the nomination choice unavoidable at the point of entry, they are forcing investors to treat succession planning as a standard administrative task rather than an afterthought.

The India Prospective

For the average Indian retail investor, this removes the familiar headache of chasing a neighbour or colleague to witness physical financial documents. Since the updated framework accepts a simple OTP sent to your registered mobile number for online submissions, completing your succession planning from a tier-two city or rural area is now exactly as straightforward as ordering food online.

The Inside Intel

If you choose to name multiple people but forget to specify their exact percentage shares, the regulator has built in an automatic failsafe. The assets in your account will simply be divided equally among your nominees. If the math results in an odd lot of shares that cannot be split perfectly, the remainder automatically goes to the very first name listed on your form.

The UDHQ. Take

Unbox Daily HQ. suggests you take five minutes to update your existing portfolios now before the mandatory nudges begin. Anyone managing their own equity investments or mutual fund SIPs should use the newly simplified OTP verification to secure their holdings. The removal of the physical witness requirement makes this the easiest administrative task you will do all year, instantly saving your family from potential legal misery down the line.

Best for: Individual retail investors who have put off updating their financial paperwork due to cumbersome physical form requirements

Who Is This For: Perfect for 28 to 55-year-old salaried professionals in India who want to ensure their wealth transfers smoothly to their dependents without requiring court intervention

The Checkout

SEBI Investor Website – India Page

The Source

SEBI Limited