Mismatches in your kin’s name, address or signature could not be corrected before their untimely death? There may now be some relief. The Securities and Exchange Board of India (Sebi), through a recent direction to the Association of Mutual Funds in India (Amfi), has simplified the process for claiming or redeeming mutual fund units by nominees and legal heirs, particularly in cases involving such discrepancies, says Benn Kochuveedan.
Redeeming mutual fund units after the death of an investor has become easier, particularly for families, nominees and legal heirs who face delays because of mismatches in the investor’s name, signature or address.
Sebi had asked Amfi to simplify and harmonise the standards governing claims and transmission of mutual fund units after the death of a unitholder. The objective is to reduce operational difficulties and make the process faster for nominees and legal heirs.
What has changed?
As part of the investor-friendly initiative, Sebi asked Amfi to further simplify the norms for claiming mutual fund units or proceeds after the death of a unitholder, including operational issues involving mismatches in name, signature and address during the transmission process.
Accordingly, Amfi amended the relevant standards. Sebi outlined the changes in its July 17 press release titled ‘Procedure to claim mutual fund units/proceeds upon death of a unitholder’.
Relief in case of address mismatch
One of the key changes relates to cases where the address recorded in the mutual fund folio differs from the investor’s latest address.
Such discrepancies could earlier result in delays and requests for additional documentation. Under the revised approach, asset management companies (AMCs) have to rely on the latest available address supported by documentary evidence.
Name and signature variations
Sebi has also introduced a harmonised approach to handling variations in an investor’s name or signature.
For name mismatches, the claimant can submit self-certified documents such as Aadhaar or a passport, subject to the applicable requirements. For signature mismatches, registrars and transfer agents (RTAs) can follow appropriate procedures depending on the nature of the mismatch.
The changes are aimed at ensuring that minor inconsistencies in records do not unnecessarily hold up transmission of mutual fund units or proceeds to legitimate claimants.
Who can claim the units?
The process depends on how the mutual fund investment was held.
If the units were held jointly and one unitholder dies, the surviving unitholder can apply for deletion of the deceased unitholder’s name, depending on the mode of holding.
If the deceased was the sole holder and had registered a nominee, the nominee can make the claim. If there is no nominee, the legal heirs have to apply as claimants.
In such cases, claimants may have to submit documents including the death certificate, PAN, KYC documents and bank account proof of the deceased or claimant, particularly for larger claims or where there are multiple legal heirs.
Where there is no nominee, additional legal documents may also be required, depending on the circumstances. These could include a will, legal heirship certificate, succession certificate, letter of administration, court order, indemnity bond, affidavit or no-objection certificate from other legal heirs.
What can still delay claims?
Despite the revised standards, transmission can still take time where the investor had not registered a nominee, had incomplete KYC or outdated bank details, or where names differ across PAN, bank and mutual fund records.
Claims can also become more complicated if the deceased investor had multiple folios across different AMCs or investments held under different combinations of joint holders.
Disputes among legal heirs can further delay the process, particularly where succession-related documents or court orders are required.