Adding Nominees to Mutual Funds: A Crucial Step for Families

SEBI’s nomination rules for mutual-fund folios under its 29 May 2026 circular have been in force since 1 September 2026. For new single-holder folios opened from that date, nomination is the default, with an opt-out option; joint folios remain optional and need every holder’s consent. Investors may name up to three nominees.

Which rule applies to a new single-holder folio?

For a single-holder mutual-fund folio opened on or after 1 September 2026, nomination is the default, but the investor can opt out. The investor can use the prescribed declaration or select the online opt-out option. This guide reflects the framework in SEBI’s 29 May 2026 circular, in force as of 13 October 2026. The circular superseded earlier SEBI nomination circulars.

Is nomination optional for a jointly held folio?

Yes. Nomination is optional for jointly held folios. If the holders choose to provide or change a nomination, all joint holders must consent, regardless of the folio’s operating mode. The single-holder default does not make nomination compulsory for a joint folio.

How many nominees can be named, and how are units apportioned?

An investor can name up to three nominees. Entering percentage shares is optional. If the form does not specify shares, the circular provides for equal apportionment among the nominees; any odd lot goes to the first nominee listed.

These are the circular’s rules for apportioning assets among nominees in the transmission process. They do not establish that a nomination resolves wider inheritance questions or determines the effect of a will.

What details does the nomination form require?

SEBI’s current form distinguishes required fields from optional information:

Form information	Status under the SEBI circular
Nominee name and relationship to the investor	Required
Nominee’s date of birth	Required when the nominee is a minor
Contact details	Optional
Percentage share	Optional
Nominee KYC or identifier	Optional
Guardian details when the nominee is a minor	Optional

An AMC or registrar may present additional fields in its own process. The table describes the SEBI circular’s form fields; it should not be read as a promise that every provider will use an identical screen or request no other information.

How can a nomination be submitted and validated?

Regulated entities must provide both online and offline nomination options. For online validation, the circular permits a Digital Signature Certificate, Aadhaar-based or another legally recognised electronic signature, or two-factor authentication using an OTP sent to the investor’s registered mobile number and email address. An Aadhaar-linked OTP is not the only validation route.

Use the current nomination form and instructions from the relevant fund house or registrar. The circular sets permitted channels and validation methods, but it does not define one universal website menu or click sequence for all providers.

Does an offline nomination form need witnesses?

A wet signature on a physical form does not require a witness under the circular. If the investor uses a thumb impression, two witnesses are required, and their names and addresses must be recorded.

How does the circular apply to existing folios?

The circular says its provisions apply to existing folios as well, with necessary modifications. Its updated forms cover subsequent changes or cancellations, while the stated single-holder default applies specifically to folios opened on or after 1 September 2026. The circular does not say that existing units are frozen or that every existing joint folio must add a nominee.

For a particular folio, use the current instructions issued by its AMC or registrar. The rules above describe SEBI’s framework; provider procedures can differ.

What can nomination change about transmission?

SEBI’s declaration describes nomination as a way to identify a person for transfer and says it can support smoother transmission to legal heirs. Where no nomination is on record, heirs may need to submit certain additional legal or court-issued documents, and this may delay transmission.

The circular does not give a universal list of those possible documents, a standard processing time, or a cost estimate. It also does not say that nomination guarantees liquidity, decides succession rights, overrides a will, or prevents a dispute. Check the current claim instructions for the specific fund and folio.

What does SEBI count as an inactive folio, and where does MITRA fit?

In its 12 February 2025 MITRA circular, SEBI defines an inactive folio as one that has a unit balance but has had no investor-initiated financial or non-financial transaction during the preceding 10 years. MITRA is the platform established to help investors trace inactive and unclaimed mutual-fund folios.

The 10-year definition describes account activity; it does not show that a folio has no nominee. The circular provides no aggregate amount of inactive or unclaimed assets caused by missing nominations, so this guide does not make that connection.

Frequently asked questions

Does every mutual-fund folio need a nominee?

For a single-holder folio opened on or after 1 September 2026, nomination is the default, but the investor may opt out through the prescribed declaration or an online choice. Nomination remains optional for a joint folio. If joint holders add or change a nominee, every holder must consent.

How many nominees can I name, and how are shares handled?

SEBI permits up to three nominees. Entering percentage shares is optional; if shares are not specified, the circular provides for equal apportionment, with any odd lot going to the first nominee listed. These are nomination-form allocation rules and do not settle wider inheritance questions.

What information is required for a nominee?

The SEBI form requires the nominee’s name and relationship to the investor. It requires a date of birth when the nominee is a minor. Contact details, percentage allocation, nominee KYC or identifier, and guardian details for a minor are listed as optional fields; a provider may show additional fields in its own process.

Does a nomination decide who inherits the mutual-fund units?

SEBI describes nomination as a way to identify a person for transfer and says it can help make transmission to legal heirs smoother. The May 2026 circular does not say a nomination settles succession rights, overrides a will, or prevents disputes. Those legal effects should not be inferred from this process guidance.

Sources

1. Ease of doing investments: Modified norms for nomination in demat accounts and mutual-fund folios SEBI checked 13 October 2026
2. Service platform for investors to trace inactive and unclaimed mutual-fund folios: MITRA SEBI checked 13 October 2026

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