In order to streamline investor onboarding and reduce compliance friction, the Securities and Exchange Board of India (SEBI) has proposed significant changes to the nomination norms for demat accounts and mutual fund (MF) folios.
Key Highlights:
- SEBI proposes default nomination for new demat and MF accounts, with simplified details and a cap of four nominees.
- It recommends using a power of attorney for incapacitated investors instead of granting access to nominees.
The regulator’s consultation paper, released on Tuesday, suggests making the nomination process the default option for new accounts, where investors would have to openly opt out if they choose not to appoint a nominee.
The proposal recommends simplifying nominee details by making only the name and relationship mandatory, while leaving other fields optional. SEBI also aims to cap the number of nominees to four, with access for incapacitated investors in retreat through a power of attorney mechanism, instead of granting access to nominees.
These recommendations follow operational challenges faced under the existing framework and are intended to simplify the process for both investors and institutions. SEBI has invited public comments on the proposals until April 7, 2026.
In a related development, SEBI Chairman Tuhin Kanta Pandey raised concerns over the declining number of registered investment advisers, with only around 1,000 advisers currently on record.
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He noted that the gap between the growing investor base and limited formal advisory support is being increasingly filled by unregulated influencers, posing risks to investor behavior and trust. Emphasizing the need for transparent, unbiased advice, Pandey highlighted recent regulatory relaxations designed to make the advisory model more scalable and accessible.
These developments reflect SEBI's broader push to empower investors through simpler processes and more robust financial advice infrastructure.
