Capital markets regulator SEBI made the nomination optional for jointly-held mutual fund accounts on May 1 to promote ease of doing business.
Additionally, SEBI allowed fund houses to have a single fund manager to oversee commodity and foreign investments. This would reduce the cost of managing the fund.
These came after a working group constituted by SEBI reviewed mutual fund regulations and recommended measures to promote the ease of doing business.
Based on the working group’s recommendation, a public consultation was carried out suggesting an option to make joint mutual fund account nominations optional and permitting fund houses to have a single fund manager to oversee commodity and foreign investments.
"Accordingly, it has been decided that the requirement of nomination ....for mutual funds shall be optional for jointly held mutual fund folios," the Securities and Exchange Board of India (SEBI) said in a circular.
Relaxation of rules
Experts believe that the relaxation of nomination requirements for joint holders is beneficial as it simplifies the nomination process by allowing the surviving member to become the nominee. This streamlines the transmission process and reduces hassle in such situations. Later, the last surviving member can assign a nominee.
The regulator has set June 30, 2024, as the deadline for all existing individual mutual fund holders to nominate or opt out of nomination. If they fail to comply, their accounts will be frozen for withdrawals.
In a separate circular, the regulator has eased the current provision with respect to dedicated fund managers.
SEBI said that for commodity-based funds such as Gold ETFs (exchange-traded funds), Silver ETFs and other funds participating in the commodities market, the appointment of a dedicated fund manager would be optional. Also, the appointment of a dedicated fund manager for making the overseas investments would be optional.
The appointment of a single fund manager for domestic and overseas commodity funds is intended to reduce the cost of managing the fund.
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