The Securities and Exchange Board of India (SEBI) on March 17, 2026, issued a consultation paper proposing modifications to its earlier circular dated January 10, 2025 on nomination facilities in demat accounts and mutual fund folios. The objective is to simplify the nomination process, improve ease of investor onboarding, and align nomination norms with banking practices, based on industry feedback and operational challenges observed during implementation.
The paper proposes key changes to address practical issues. Firstly, it suggests removing the provision allowing nominees to operate accounts during the investor’s lifetime in case of incapacitation, and instead relying on the existing Power of Attorney mechanism. Secondly, to simplify onboarding, it proposes making only the name and relationship of nominee mandatory, while other details such as contact information and percentage share remain optional, with equal distribution applying where shares are not specified.
Further, it proposes that nomination be the default option during account opening, with investors required to actively opt-out through a consent-based pop-up, replacing the earlier OTP/video-based process. Additionally, considering low usage and operational concerns, the maximum number of nominees is proposed to be capped at four (instead of ten), aligning with banking norms. Public comments have been invited on these proposals until April 7, 2026.
[Consultation Paper dated March 17, 2026]
