Nomination Rules for Mutual Funds and Demat in 2026: What Changed
Last updated: 13 October 2026
Quick answer (Nomination Rules): Under SEBI's circular of 29 May 2026, effective 1 September 2026, you can name up to three nominees on a mutual fund folio or demat account. Only the nominee's name and relationship are mandatory. New single-holder accounts must either nominate or sign an opt-out declaration. Nomination is optional for joint holdings, but all joint holders must consent to any change.
Last updated: 13 October 2026 Quick answer (Nomination Rules): Under SEBI's circular of 29 May 2026, effective 1 September 2026, you can name up to three nominees on a mutual fund folio or demat account. Only the nominee's name and relationship are mandatory. New single-holder accounts must either nominate or sign an opt-out declaration. Nomination is optional for joint holdings, but all joint holders must consent to any change. Key takeaways Cap: up to 3 nominees per folio or demat account, down from the 10 allowed under the January 2025 framework. Mandatory fields: name and relationship only, plus date of birth for a minor nominee. New accounts: single-holder accounts opened from 1 September 2026 need a nominee or an active opt-out. Default split: equal shares if you skip percentages; odd lots go to the first nominee. Existing investors: no freeze for missing nominations, but twice-yearly SMS and email reminders. Banks differ: deposits allow 4 nominees since 1 November 2025. Few investment rules have changed as often in so short a time as nomination. In January 2025 SEBI allowed up to ten nominees and asked for PAN or Aadhaar details for each. By December 2025 the final phase had been deferred indefinitely. In May 2026 the regulator scrapped the lot and started again with a simpler rulebook. If you set up nominations in 2025 or ignored the flood of "update your nominee" emails, you may be unsure where you stand. This guide explains the mutual fund and demat nomination rules in force as of October 2026, what happened to the old framework, how joint holders and minors are treated, and a short audit you can do this weekend. What are the mutual fund and demat nomination rules in 2026? A nomination is an instruction telling your fund house (through its registrar, CAMS or KFintech) or your depository participant whom to hand your holdings to when you die. It is not a will. It decides who receives the units or shares first, not who finally owns them. The rules now come from a single SEBI circular, Ease of doing investments: Modified Norms for Nomination in Demat Accounts and Mutual Fund Folios (SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676), dated 29 May 2026. It came into effect on 1 September 2026 and superseded 18 earlier circulars, going back to a 2002 mutual fund circular. Its key provisions: Up to three nominees per demat account or mutual fund folio. Nominate or opt out: for single-holder accounts and folios opened on or after 1 September 2026, the investor must either provide a nomination or submit the standard opt-out declaration. Skipping the field is not allowed. Joint holdings: nomination is optional, but adding or changing a nominee needs the consent of all joint holders, whatever the mode of operation. Two mandatory fields: the nominee's name and relationship. Date of birth becomes mandatory only for a minor nominee. Equal split by default: if no percentages are given, the holding is divided equally, with any odd lot going to the first nominee named. Unlimited changes: you can add, change or cancel a nomination any number of times, and must receive an acknowledgement each time. Timeline of SEBI nomination rules for mutual funds and demat accounts from January 2025 to the May 2026 circular What happened to the 10-nominee rule? The January 2025 circular (dated 10 January 2025) was ambitious. It raised the cap to ten nominees, required identifiers such as PAN or the last four digits of Aadhaar for every nominee, and let a physically incapacitated single holder authorise a nominee to operate the account. A February 2025 circular split implementation into phases. The industry struggled to build the systems. SEBI's 30 July 2025 circular pushed Phase II to 8 August 2025 and Phase III to 15 December 2025. On 11 December 2025 SEBI deferred Phase III again, to a date "to be notified separately", after representations asking it to re-examine the structure. On 17 March 2026 SEBI floated a consultation paper proposing fewer mandatory details, nomination as the default and a cap of four nominees. The final May 2026 circular went further and settled on three. The nominee-operation mandate for incapacitated investors does not appear in the new circular; investors who need someone to operate their account should discuss a power of attorney or other arrangement with their DP or fund house. What if you already named more than three nominees? The May 2026 circular does not separately address nominations made earlier with four or more nominees. It does say a new nomination form supersedes any prior one. If you named more than three people under the 2025 rules, ask your RTA or depository participant how your existing nomination is being recorded, and consider filing a fresh form within the new cap. How many nominees can you have across different assets? India does not have one nomination law. Each asset follows its own statute or regulator, and the caps differ. This matters when you try to keep a family's plan consistent. Asset Rule source Max nominees Key feature Mutual fund folio (SOA or demat) SEBI circular, 29 May 2026 3 Nominate or opt out for new single-holder folios Demat account (shares, bonds, ETFs) SEBI circular, 29 May 2026 3 Same rules as mutual funds Bank deposits Banking Laws (Amendment) Act, 2025, in force 1 Nov 2025 4 Simultaneous (with shares) or successive Bank lockers and safe custody Banking Laws (Amendment) Act, 2025 4 Successive nomination only Life insurance Section 39, Insurance Act, 1938 One or more Spouse, parents or children can be "beneficial nominees" Bar chart comparing nomination rules: 3 nominees for mutual funds and demat, 4 for bank deposits and lockers, 10 under the superseded 2025 SEBI framework Bank nominations changed separately. The Ministry of Finance notified that the nomination provisions of the Banking Laws (Amendment) Act, 2025 would take effect from 1 November 2025. Depositors can now name up to four nominees, either simultaneously (with percentage shares adding up to 100%) or successively (the next person steps in only if the earlier one is no longer there). Lockers and safe custody articles allow only successive nomination. Is nomination mandatory for existing mutual fund and demat accounts? For new single-holder accounts opened from 1 September 2026, yes: you must either nominate or actively opt out. For existing accounts, the circular applies its provisions to old folios too, but there is no freeze. The 2024-era threat of freezing accounts without nominations was dropped in June 2024 and has not returned. Instead, SEBI relies on nudges. Depository participants and mutual fund RTAs must send email and SMS reminders twice a year to holders who have not nominated, including those who opted out. Online platforms must show a pop-up on the benefits of nomination at the first login each day. Investors who have already nominated should not receive these reminders. Your account statements must also show either the nominee names or a simple Yes/No indicator, depending on what you choose in the form. Check your next consolidated account statement (CAS) to confirm what is on record. What does opting out actually mean? Opting out is a signed (or online, actively accepted) declaration that you do not wish to nominate anyone "at this point of time". The standard Annexure-B text warns you that without a nominee, your heirs may need extra legal or court documents, and that holdings left unclaimed for long may move to the Investor Education and Protection Fund. There are valid reasons to opt out, for example while a divorce is in progress, or when a carefully drafted will is meant to govern everything. For most families, though, a nomination makes the claim process far quicker. See our step-by-step guide to claiming mutual funds after a death (/insights/mutual-fund-transmission-after-death) for how much paperwork a nomination saves. What details do you need to add a nominee? The 2026 form is deliberately short. SEBI asked regulated entities to let investors fill in any, all or none of the optional fields. Comparison of mandatory and optional fields in the 2026 mutual fund and demat nomination form Optional fields are optional, but some are worth filling in. A nominee's mobile number and email help the RTA contact them. A PAN or Aadhaar reference reduces the risk of a name mismatch delaying the claim. Explicit percentages avoid surprises from the equal-split default. Can a minor be a nominee? Yes. You must give the minor's date of birth. Guardian details, including the guardian's contact and identifier, are optional under the circular, but it is sensible to provide them. If you die while the nominee is still a minor, the guardian will deal with the RTA or DP and will need to complete KYC. How do you submit or change a nomination? Online: through your fund house website, CAMS or KFintech portals, MF Central, or your broker's app, authenticated by a digital signature, Aadhaar e-sign, or two-factor verification that includes an OTP sent to your registered mobile and email. Physical form: a wet signature needs no witness under the 2026 rules. A thumb impression needs two witnesses, with their names and addresses. Acknowledgement: the RTA or DP must acknowledge every new nomination, change or cancellation. Keep it with your estate papers. Does a nominee become the owner of your mutual funds? No. This is the single most misunderstood point in Indian estate planning. SEBI's July 2026 transmission framework states that nominees receive the assets of a deceased holder as trustees on behalf of the legal heirs. In Shakti Yezdani v. Jayanand Jayant Salgaonkar (December 2023), the Supreme Court held that nomination under company and depository law does not override succession law. In practice, the fund house transfers the units to the nominee quickly, and its liability ends there. Who finally keeps the money is decided by your will or, if there is none, by the succession law that applies to you. Our explainer on nominee vs legal heir (/insights/nominee-vs-legal-heir-india) walks through the case law and a worked family example. The practical lesson: a nomination and a will do different jobs. The nomination gets the money out fast; the will decides who keeps it. The cleanest plans make both point in the same direction. Read how to write a valid will in India (/insights/how-to-write-valid-will-india) alongside this guide. How does nomination work for joint mutual fund folios and demat accounts? In a joint holding, the surviving holders come first. If one holder dies, the units or shares pass to the survivors. SEBI's July 2026 transmission circular says the only document survivors may be asked for is a copy of the death certificate, with no fresh KYC, indemnity or undertaking. The nominee steps in only after all joint holders have died. That is why nomination is optional for joint accounts. But it is still wise to add one. If a couple dies together, as can happen in an accident, a joint folio without a nominee forces the children down the longer legal-heir route. Remember that all joint holders must consent to any nomination or change, even in an "either or survivor" folio. Our guide on joint holding vs nomination (/insights/joint-holding-vs-nomination) compares the two approaches in detail. Who gets the units if a nominee dies before you? Under the SEBI transmission framework of 23 July 2026, if one of several nominees dies before you and you have not updated the nomination, that nominee's share passes pro rata to the surviving nominees. If your only nominee has died, the holding is treated as having no nominee and goes through the legal-heir route. So a death in the family is a cue to review nominations, not just a will. With the cap now at three, naming a primary nominee and a spouse or adult child as the second can provide a back-up. Worked example: a Pune family's nomination clean-up Consider Sunita, 52, a Pune-based IT manager. Her CAS shows 11 mutual fund folios across six fund houses worth ₹62 lakh, and one demat account with ₹18 lakh of shares and ETFs. Four folios, opened in 2014, have no nominee. Two newer folios name ten-year-old nephews from a 2025 enthusiasm for the ten-nominee rule. Her clean-up takes one afternoon: Four unnominated folios (₹21 lakh): she adds her husband at 50% and two adult children at 25% each through MF Central with OTP verification. Two over-crowded folios: she files fresh forms within the three-nominee cap, which supersede the old nominations. Demat account: she uses her broker's app to add the same three nominees with the same percentages, so every asset points the same way. Will: she asks her lawyer to mention the folios and percentages so the will and nominations agree. Had she died before the clean-up, her family would have needed indemnity bonds and affidavits-cum-NOC from all legal heirs for the unnominated folios, rather than a simple transmission request. Six-step checklist to audit mutual fund and demat nominations for a family Common nomination mistakes to avoid Assuming the bank nomination covers your funds. Each folio and demat account needs its own nomination. Naming an elderly parent alone. If the parent dies first and you do not update the form, the folio may end up with no effective nominee. Ignoring the will. A nominee who is not the intended heir can lead to family disputes, because the nominee is only a trustee. Leaving percentages to default. Equal splits may not match your intention, especially with a minor child. Never checking the CAS. Your consolidated account statement (/insights/consolidated-account-statement-cas-guide) now shows nomination status; read it at least once a year. Outdated KYC and contact details. A mismatch between your records and your documents can slow a claim. See our guide to mutual fund KYC status (/insights/mutual-fund-kyc-status-validated-registered-on-hold) . Nomination is one piece of a wider plan. Our estate planning guide (/insights/estate-planning-guide-india) covers wills, succession and trusts, and the estate planning service page (/products/estate) explains how we help families organise these papers. If old folios are scattered, our guide to consolidating scattered investments (/insights/consolidate-scattered-investments-and-policies) is a good starting point. Related reading Claiming Mutual Funds After a Death: The Transmission Process (/insights/mutual-fund-transmission-after-death) Nominee vs Legal Heir: Who Actually Gets the Money (/insights/nominee-vs-legal-heir-india) Demat Basics: Nominees, DDPI and Pledging Shares (/insights/demat-account-nominee-ddpi-pledge) Joint Holding vs Nomination: Which Protects Your Family Better (/insights/joint-holding-vs-nomination) Claiming a Parent's Investments After Death: A Checklist (/insights/claim-deceased-parent-investments-checklist) Frequently Asked Questions How many nominees can I add to a mutual fund folio in 2026? Up to three. SEBI's circular dated 29 May 2026, effective 1 September 2026, caps nominations at three per mutual fund folio or demat account. This replaced the January 2025 framework that allowed ten. You can assign percentage shares to each nominee; if you do not, the units are split equally and any odd unit goes to the first nominee named on the form. Is nomination compulsory for mutual funds now? For single-holder folios and demat accounts opened on or after 1 September 2026, you must either name a nominee or sign the standard opt-out declaration; leaving it blank is not allowed. For existing accounts there is no freeze. Instead, RTAs and depository participants send reminders twice a year to investors who have not nominated or have opted out. Will my account be frozen if I have not added a nominee? No. SEBI dropped the freeze proposal in 2024 and the May 2026 circular relies on reminders and login pop-ups rather than restrictions. Your investments remain fully operational. Even so, adding a nominee is worth doing, because without one your heirs face more paperwork, including indemnity bonds, affidavits and sometimes court documents, to claim the holdings. Do joint holders need to add a nominee? Nomination is optional for joint folios and demat accounts because the surviving holders receive the assets first. However, a nominee protects your family if all joint holders die together. Under the 2026 rules, all joint holders must consent before a nominee is added, changed or cancelled, regardless of whether the account is operated jointly or as "either or survivor". Is the nominee the final owner of my mutual fund units? No. SEBI's July 2026 transmission framework states that nominees receive the assets as trustees for the legal heirs. The Supreme Court held in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) that nomination does not override succession law. The fund house's job ends once it transfers the units; final ownership follows your will or the applicable succession law. What happens if my nominee dies before me? If you named several nominees and one dies before you without the nomination being updated, that person's share passes pro rata to the surviving nominees under SEBI's transmission framework. If your only nominee has died, the holding is treated as having no nominee, and your legal heirs must use the longer documentation route. Update nominations after any death in the family. Can I nominate a minor child for my mutual funds? Yes. The minor's date of birth is mandatory on the nomination form. Guardian details are optional under the 2026 circular, but providing them is sensible. If you die while the child is a minor, the guardian handles the transmission and must complete KYC on the child's behalf until the child turns 18. Do I need a witness to sign the nomination form? Not if you sign it yourself. Under the May 2026 circular, a physical form with a wet signature needs no witness. Only a thumb impression requires two witnesses, whose names and addresses must be recorded. Online nominations are authenticated by Aadhaar e-sign, digital signature or OTP verification on your registered mobile and email. Sources: SEBI circular on modified nomination norms, 29 May 2026 (https://www.sebi.gov.in/legal/circulars/may-2026/ease-of-doing-investments-modified-norms-for-nomination-in-demat-accounts-and-mutual-fund-folios_101703.html) ; SEBI circular deferring Phase III, 11 December 2025 (https://www.sebi.gov.in/sebi_data/attachdocs/dec-2025/1765451323097.pdf) ; SEBI circular extending Phase II and III timelines, 30 July 2025 (https://images.taxscan.in/feeds/2025/07/31/2071441-implementationofrevisednominationwatermark.pdf) ; SEBI transmission framework circular, 23 July 2026 (https://www.sebi.gov.in/sebi_data/attachdocs/jul-2026/1784869499027.pdf) ; Taxmann on bank nominations from 1 November 2025 (https://www.taxmann.com/post/blog/banking-laws-amendment-allows-up-to-four-nominees/) ; Argus Partners on Shakti Yezdani (2023) (https://www.argus-p.com/updates/updates/supreme-court-nomination-process-under-companies-act-does-not-override-succession-laws/) . Worked examples are Money n Wealth illustrations. Are your family's nominations actually in order? Scattered folios and outdated nominees are the most common gaps we find, and they are easy to fix while you are around. Talk to Money n Wealth (/contact) for a free portfolio and nomination review. This article is for general educational purposes only and does not constitute financial or legal advice. Figures and examples are illustrative. Please consult a qualified financial adviser or lawyer for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
How many nominees can I add to a mutual fund folio in 2026?
Up to three. SEBI's circular dated 29 May 2026, effective 1 September 2026, caps nominations at three per mutual fund folio or demat account. This replaced the January 2025 framework that allowed ten. You can assign percentage shares to each nominee; if you do not, the units are split equally and any odd unit goes to the first nominee named on the form.
Is nomination compulsory for mutual funds now?
For single-holder folios and demat accounts opened on or after 1 September 2026, you must either name a nominee or sign the standard opt-out declaration; leaving it blank is not allowed. For existing accounts there is no freeze. Instead, RTAs and depository participants send reminders twice a year to investors who have not nominated or have opted out.
Will my account be frozen if I have not added a nominee?
No. SEBI dropped the freeze proposal in 2024 and the May 2026 circular relies on reminders and login pop-ups rather than restrictions. Your investments remain fully operational. Even so, adding a nominee is worth doing, because without one your heirs face more paperwork, including indemnity bonds, affidavits and sometimes court documents, to claim the holdings.
Do joint holders need to add a nominee?
Nomination is optional for joint folios and demat accounts because the surviving holders receive the assets first. However, a nominee protects your family if all joint holders die together. Under the 2026 rules, all joint holders must consent before a nominee is added, changed or cancelled, regardless of whether the account is operated jointly or as "either or survivor".
Is the nominee the final owner of my mutual fund units?
No. SEBI's July 2026 transmission framework states that nominees receive the assets as trustees for the legal heirs. The Supreme Court held in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) that nomination does not override succession law. The fund house's job ends once it transfers the units; final ownership follows your will or the applicable succession law.
What happens if my nominee dies before me?
If you named several nominees and one dies before you without the nomination being updated, that person's share passes pro rata to the surviving nominees under SEBI's transmission framework. If your only nominee has died, the holding is treated as having no nominee, and your legal heirs must use the longer documentation route. Update nominations after any death in the family.
Can I nominate a minor child for my mutual funds?
Yes. The minor's date of birth is mandatory on the nomination form. Guardian details are optional under the 2026 circular, but providing them is sensible. If you die while the child is a minor, the guardian handles the transmission and must complete KYC on the child's behalf until the child turns 18.
Do I need a witness to sign the nomination form?
Not if you sign it yourself. Under the May 2026 circular, a physical form with a wet signature needs no witness. Only a thumb impression requires two witnesses, whose names and addresses must be recorded. Online nominations are authenticated by Aadhaar e-sign, digital signature or OTP verification on your registered mobile and email.
Are your family's nominations actually in order?
Scattered folios and outdated nominees are the most common gaps we find, and they are easy to fix while you are around. Talk to Money n Wealth for a free portfolio and nomination review.
