The Securities and Exchange Board (SEBI) of India vide Circular Dated 24th December 2019 has laid down a framework for making investment in mutual funds by guardian in the name of minors and to ease the process for transmission of such schemes.
The payment for investment by means of cheque, demand draft or any other mode shall be accepted from the bank account of the minor or from a joint account of the minor with the guardian only and once the minor attains the age of majority and the minor in whose name the investment was made, shall be required to provide all the KYC details, updated bank account details including cancelled original cheque leaf of the new account. Also, no further transactions shall be allowed till the status of the minor is changed to major.
In order to improve the processing turnaround time for transmission requests, SEBI said Asset Management Companies(AMC) will have to implement image based processing wherever the claimant is a nominee or a joint holder in the investor folio.
Further the AMC shall have a dedicated, central help desk and a webpage carrying relevant information and instructions in order to provide assistance on the transmission process and need to implement a common set of document requirements for transmission of units to claimant who are nominees or joint holders in the investor account. Also, they have to implement a uniform process for treatment of unclaimed funds to be transferred to the claimant including the unclaimed dividends.
AMCs and AMFI shall promote the importance of nomination as a part of its Investor education and awareness programmes.
To ensure uniformity across the industry, SEBI has asked AMFI to prescribe the form for a common set of documents needed for transmission of units as well as uniform process for treatment of unclaimed funds within 30 days and all fund houses need to mandatorily follow the same.
Click here to read the Notification.
