SEBI makes nomination optional for joint mutual fund portfolios

Capital markets regulator SEBI on Wednesday made the nomination optional for jointly-held mutual fund accounts in a bid to promote ease of doing business.

Additionally, SEBI allowed fund houses to have a single fund manager to oversee commodity and foreign investments. This would reduce the cost of managing the fund.

The regulator has set June 30, 2024, as the deadline for all existing individual mutual fund holders to nominate or opt out of nomination. If they fail to comply, their accounts will be frozen for withdrawals.

These came after a working group constituted by SEBI reviewed mutual fund regulations.

Based on its recommendations, a public consultation was carried out suggesting the option to make joint mutual fund account nominations optional and permitting fund houses to have a single fund manager to oversee commodity and foreign investments.

"Accordingly, it has been decided that the requirement of nomination .for mutual funds shall be optional for jointly held mutual fund folios," the regulator said in a circular.

Experts believe that the relaxation is beneficial as it simplifies the process of nomination by allowing the surviving member to become the nominee. This streamlines the transmission process and reduces hassle in such situations. Later, the last surviving member can assign a nominee.

In a separate circular, the regulator has eased the current provision with respect to dedicated fund managers.

SEBI said that for commodity-based funds such as Gold ETFs, Silver ETFs, and other funds participating in the commodities market, the appointment of a dedicated fund manager would be optional. Also, the appointment of a dedicated fund manager for making the overseas investments would be optional.

www.thehindubusinessline.com dt. 02.05.2024