Current Procedure:
Decentralized and Individualized Reporting:
- When an investor passed away, the family members, nominees, or legal representatives had to navigate through a notably intricate process to manage the deceased’s investments.
- Each entity (like mutual funds, brokerages, and other investment firms) had to be individually informed about the investor’s demise.
- Separate reporting was required for different investment entities, each demanding its unique documentation and processes.
- This method was not only time-consuming but also often resulted in a laborious and emotionally challenging experience for the bereaved, as the systems and documentation required could vary widely between different entities.
With the Introduction of the Centralized Reporting Mechanism:
Unified and Streamlined Reporting:
- SEBI’s new centralized mechanism, effective from January 1, 2024, significantly simplifies the procedure following an investor’s death.
- A unified report: The bereaved party needs to inform only one SEBI-regulated entity about the demise, leveraging a single-point notification that propels a series of subsequent actions across all relevant entities.
- Minimal documentation: The reporting individual is mandated to present just the death certificate and the deceased’s PAN to set the mechanism in motion.
- Ensured security: Upon notification, immediate actions are taken to verify the provided documents and halt all debit transactions from the investor’s account, safeguarding it from potential unauthorized activities.
- Facilitated transmission: The subsequent processes, including updating the investor’s status to “Blocked Permanently” in the KYC records and initiating the transmission of investments to the rightful heirs or nominees, are executed smoothly and efficiently.
SEBI’s new centralized reporting mechanism simplifies the previously complex investor death reporting process, reducing administrative burdens and prioritizing the emotional well-being of bereaved families while ensuring secure investment transfers.
