Description
SEBI mandates all mutual fund investors to either nominate or formally opt-out with proper authentication, effective December 15, 2025 for fresh folios.
Summary
SEBI has mandated that all mutual fund investors must either appoint a nominee or formally opt-out of nomination for their investments. This requirement applies to both existing and new investors and involves OTP-based two-factor authentication along with either a signed declaration or video verification. From December 15, 2025, transactions for creating fresh folios under non-demat mode without proper nomination compliance will be rejected at the AMC/RTA level.
Key Points
- All mutual fund investors must either nominate or formally opt-out for their investments
- Requirement applies to both existing and new investors
- Authentication involves OTP-based 2FA with signed declaration or video verification
- Missing nomination/opt-out details will lead to transaction rejection for fresh folios creation under non-demat mode
- Unique reference number must be generated and maintained for opt-out documentation
- Nomination details can be modified at any time with reauthentication
- Members must upload and store nomination opt-out documents for regulator access
- All UCC holders must authenticate through OTP for nomination updates
Regulatory Changes
SEBI has introduced mandatory nomination or opt-out requirements for mutual fund investments:
- Nomination Requirement: Investors must designate a nominee or formally opt-out
- Authentication Protocol: OTP-based two-factor authentication required for opt-out
- Documentation: Signed declaration form or video recording mandatory for opt-out
- Reference Number System: Unique acknowledgment number must be generated during opt-out process
- Record Maintenance: Members must store opt-out documents and provide to RTA/AMC/Regulator when required
- Modification Process: Nomination changes require reauthentication of all UCC holders
Compliance Requirements
For Investors:
- Complete nomination or opt-out process before December 15, 2025
- Provide OTP-based authentication using registered email ID or mobile number
- Submit signed declaration form or video recording for opt-out
- Ensure all UCC holders complete authentication process
For Members/Intermediaries:
- Generate unique reference number during opt-out process
- Upload nomination opt-out declaration forms via Admin » Client Details » ELog/Image Upload
- Store opt-out documents and maintain records
- Provide documents to RTA/AMC/Regulator as required
- Use existing API interface for uploading opt-out declarations
- Reject transactions for fresh folios without nomination compliance from December 15, 2025
Online Opt-Out Process:
- Complete two-factor authentication (OTP)
- Submit formal declaration form or record video per SEBI norms
Important Dates
- December 15, 2025: Transactions for fresh folios creation under non-demat mode without proper nomination compliance shall be liable for rejection at AMC/RTA level
Impact Assessment
High Impact on:
- All mutual fund investors required to take action
- Fresh folio creation process - transactions will be rejected without compliance
- Members/intermediaries handling mutual fund transactions
- AMCs and RTAs processing new investments
Operational Changes:
- Enhanced documentation and authentication requirements
- Additional compliance burden on members to maintain opt-out records
- Potential transaction delays if investors don’t complete nomination/opt-out
- System changes required for OTP authentication and reference number generation
Investor Protection:
- Strengthens nominee succession process
- Ensures informed decision-making through authentication requirements
- Provides flexibility to modify nomination details anytime
- Maintains audit trail through reference numbers and stored documentation
Impact Justification
Mandatory compliance requirement affecting all mutual fund investors with transaction rejection risk from December 15, 2025 for non-compliant fresh folios