The Current State of Nomination
India's market regulator, the Securities and Exchange Board of India (SEBI), has rightly put a spotlight on ensuring every investor nominates a beneficiary for their assets. As of new rules effective September 2026, it is mandatory for anyone opening
a new single-holder demat account or mutual fund folio to either provide a nomination or explicitly opt out. This move is designed to prevent the pile-up of unclaimed assets and make sure your wealth reaches your loved ones without legal hurdles. However, the system's design contains a fundamental flaw. Your demat account, which holds your shares, bonds, and exchange-traded funds (ETFs), has its own nomination. Your mutual fund investments, often held directly with Asset Management Companies (AMCs) in a folio, have a completely separate nomination. An investor might hold several mutual fund folios across different AMCs, each potentially requiring a separate nomination declaration. This fragmented approach, while well-intentioned, sets a trap for even the most diligent investor.
Why This Fragmentation Is a Problem
The problem with separate nomination systems is that it relies on perfect, repetitive action from the investor. When a significant life event occurs—a marriage, the birth of a child, or the loss of a family member—you need to update your nominee. It’s easy to remember to update the nomination in your primary demat account but forget about the three other mutual fund folios you started years ago. This oversight can lead to a situation where different assets have conflicting or outdated nominees. For your heirs, this can be a nightmare. Instead of a smooth transfer of assets, they are faced with a confusing paper trail, where some assets are easily claimed while others are stuck in limbo, potentially requiring lengthy legal processes to prove rightful inheritance. This complexity directly undermines the core purpose of nomination, which is to simplify succession. The massive value of unclaimed financial assets in India is a testament to this systemic friction. When processes are complicated, things get missed, and families are the ones who ultimately pay the price.
The Solution: A Single, Unified Audit
The path forward is clear: India needs a unified nomination system. This is not a radical idea; the groundwork already exists. Investors are familiar with the Consolidated Account Statement (CAS), a single document that provides a unified view of all their investments across stocks and mutual funds, linked by their Permanent Account Number (PAN). It is time to apply the same logic to nominations. A 'Unified Nomination Registry' could be created where an investor’s nomination choice is linked to their PAN or KYC profile. When an investor updates their nominee through this central system, the change should automatically cascade across every demat account and mutual fund folio linked to their PAN. This 'update once, apply everywhere' model would eliminate the risk of inconsistent or forgotten nominations. It transforms nomination from a repetitive, error-prone task into a single, decisive action, providing investors with true peace of mind.
Benefits of a Unified Approach
Adopting a single-window nomination process would bring immense benefits. For investors, it dramatically simplifies financial housekeeping. You would no longer need to log into multiple portals or fill out separate forms for each investment. This reduces paperwork, saves time, and significantly lowers the chance of making a mistake. For beneficiaries, the process of claiming assets would become infinitely smoother and faster. With a single, undisputed source of nomination truth, the ambiguity that often leads to delays and disputes would vanish. For the financial system as a whole, it would be a major step towards efficiency and fulfilling SEBI’s goal of reducing unclaimed assets. It aligns perfectly with the broader push towards digitisation and 'Ease of Living,' making the capital markets more accessible and secure for millions of retail investors. A unified nomination isn't just a convenience; it's a necessary evolution for a mature financial market that truly serves its participants.
