In another major move, the government has introduced a significant benefit for the nominees of deceased investors, allowing them to access the mutual funds and stocks of the deceased. Starting April 1, registered nominees will be able to retrieve information and statements of demat and mutual fund holdings through the government-backed DigiLocker platform. The move will not only help investors but also their nominees in passing on the holdings to rightful heirs on investors demise.

Why This Move?

The new initiative allowing nominees to access stocks and mutual funds aims to reduce and prevent unclaimed investments after an investor’s passing. To tackle the issue of unclaimed investments, the Securities and Exchange Board of India (SEBI) has partnered with DigiLocker, making it easier for nominees to access stocks and mutual funds of deceased investors.

According to media reports, there are Rs 2,00,000 crore worth unclaimed assets in India. These include equity shares, fixed deposits, bonds and other instruments. In most of the situations, where no body claims, the money flows into an investor protection fund.

DigiLocker will store your demat account statements for shares and mutual funds. It will also store the consolidated account statement. Insurance companies and banks have already done it for policy and bank statements. Similarly, you can also store your National Pension Scheme statements.

DigiLocker

DigiLocker is a secure, cloud-based platform by the Government of India. It allows citizens to store, access, and share various documents and certificates electronically. It is for promoting a paperless and digital approach to governance. The platform allows users to electronically store critical documents such as Aadhaar, PAN, driving licence, bank account statements, insurance policy documents and NPS statements.

Here’s How The New Mechanism Work

After an investor passes away, financial institutions will grant read-only access to the DigiLocker account to properly documented nominees. From there the nominees can assure that essential financial information is accessible to the legal heirs.

If an investor passes away, financial institutions will grant their nominees read-only access to the DigiLocker account, ensuring that legal heirs can easily access essential financial information. In this process, nominees are responsible for formally receiving the deceased investor’s funds from banks and mutual fund houses. However, they are not the final owners of these assets. Instead, they must transfer the funds to the rightful legal heirs.

To access the deceased investor’s financial documents stored in DigiLocker, nominees must first verify their identity. Once authenticated, they can view and manage the records. This means that nominees can use DigiLocker to retrieve and download holding statements, ensuring that the deceased investor’s assets are not classified as unclaimed or unidentified.

However, the nominee assigned for investment holdings and the one designated for DigiLocker access may be different individuals. If that happens, the DigiLocker nominee must inform the investment nominee or the legal heirs about the deceased’s investments. This helps them apply to the relevant asset management company or depository participant to transfer ownership of the holdings.