DigiLocker to Revolutionize Mutual Fund and Share Transfers, Says SEBI
SEBI, the Securities and Exchange Board of India, has a new plan to fix the problem of unused mutual funds and shares. The plan is to link DigiLocker with demat and mutual fund details so that nominees can easily get the assets if the investor passes away.
Problem of Unclaimed Investments
Many mutual fund units and shares remain unclaimed because investors do not declare nominees. As of March 2023, shares worth over Rs.25,000 crore and mutual fund dividends worth more than Rs.2,600 crore were unclaimed. This new system makes sure that these financial assets go to the right nominees easily.
What is DigiLocker?
DigiLocker is a government-run digital storage facility where people can securely store important documents. It has already allowed users to view financial details such as bank accounts, insurance policies, and National Pension System records. SEBI now wants to add mutual fund and demat account details to this platform to make managing investments easier for everyone.
Under the proposal, investors will have to declare their nominees on DigiLocker, which will include contact details such as mobile numbers and email addresses. This declaration will be in addition to the nominee information provided in their demat accounts and mutual fund folios.
It has the intention of an automated and streamlined integration process. The necessary account information of the depositories and mutual funds will be made available to DigiLocker so that it can maintain real-time data. In the event of the death of the investor, DigiLocker will send messages to nominees through SMS and email.
The trigger for the above notification will come from data received from two main sources:
- The death registration records are maintained by the Registrar General of India.
- KYC Registration Agencies (KRAs).
After registration, nominees will receive access to the deceased investor’s financial statements in their DigiLocker account. The entire process will thus automate the procedure for the transfer of assets and prevent the chances of the asset staying unclaimed.
The integration offered to the investors and their families is going to be on multiple counts. With one-place centralization of records in DigiLocker, nominees would have a more transparent view of the investor’s holding and thus initiate transmission without delays and complications.
The proposal ensures that the nominees are immediately notified of the death of an investor so they can act promptly. This will help reduce the number of unused assets and give families more financial security.
The SEBI plan exhibits how valuable digital tools, such as DigiLocker, are to solve the old problem of managing financial assets. Linking mutual fund and demat details with DigiLocker will enable the transfer of assets to become simpler and clearer, allowing millions of investors and their families to pass down the money without trouble.
This is a proposal that represents one giant leap in enhancing convenience and security in financial planning, a rising trend of relying on digital solutions. Once it becomes effective, it is capable of transforming financial asset management and transfer practices in India.
