How to Add a Nominee to Demat Account

In an order, the Securities and Exchange Board of India (SEBI) mandated all Demat account holders to add a nominee to their account. The order states that the accounts will be frozen if you fail to add a nominee to the Demat account by March 31, 2023.   

 

However, in a revised order, the SEBI has extended the date to add a Demat account nominee by September 30, 2023. Even if it wasn't mandatory, the nomination works in your favour as an investor. 

 

As such, it would be wise to complete the process at the earliest. Read on to know why adding a Demat account nominee is important and how you can complete the nomination process.

 

The Demat account nomination is a process by which an account holder can add a custodian to their account. Upon the death of the account holder, the custody of the account goes to the nominee.

 

However, in legal terms, a nominee is neither an owner nor a legal beneficiary of the Demat account upon the account holder’s death. A nominee only holds the account till the time a legal heir makes a claim.  

 

For joint accounts, upon the death of the first holder, ownership then transfers to the second owner. However, upon the death of both holders, the nominee becomes the custodian of the account.

A Demat account nominee can be any individual who is a relative or has a relationship with you. For instance, you can add your parents, siblings, spouse, children, or a close friend, as a nominee for the Demat account. Even minors can be nominees for Demat accounts.

 

When adding a nomination for a Demat account, note that you cannot add any non-individuals, such as corporations, institutions, or Karta of HUF as nominees.

Here is how you can complete the Demat account nomination online in a few simple steps:

 

1. Log in to your Demat account on your Depository Participants’ (DPs) portal

2. Go on the ‘Profile’ segment

3. Select the ‘My Nominees’ option

4. Choose ‘Add Nominee’

5. Enter the nominee’s details 

6. Attach a copy of the nominee’s proof of identity

7. Enter the share of the nominee in percentage terms

8. Validate the process with your e-signature using the Aadhaar OTP 

    

Adding a nominee for the Demat account is now mandatory. Hence, if you have not already completed the Demat account nomination process, do so at the earliest. 

You can also add your nominee to the Demat account through an offline process. The steps for this are as simple as the online process. Here is an outline of how you can do it:

 

1. Visit your DP’s website and login to your account

2. Navigate to the profile section

3. Download the nominee form

4. Print and fill in the required information

5. Attach a copy of the nominee’s ID proof

6. Post the form to the main office of your DP

    

Once your DP processes your application, the nominee details will be visible in your Demat account. Remember, the offline process may take longer than the online one. 

The process of modifying the nominee details is available online and offline. However, this may depend on your DP. Some DPs do not allow you to update the nominee details online. You can check this information by visiting your DPs website. 

 

In any case, updating the nominee details in your Demat account has some general steps, as explained below. To update the information online, follow these steps:

 

1. Login to your account

2. Go to the profile section

3. Click on View/Update nominee

4. Enter the required details

5. Confirm and verify the details

6. Submit the request

    

For the offline procedure, you can get the modification form from your DP’s website. Download and fill out the form with the details. Once done, attach the nominee’s ID proof as per the requirement of your DP and post it to your DP’s head office. 

 

Upon receiving the request, the DP will process it, post which the details will be available in your account. In both online and offline processes, you will receive communication from DP when you submit the request and when it gets processed.

The first among the many benefits of Demat account nomination is that your account will not get frozen as per the new SEBI rules. In addition to this, going through with the Demat account nominee update ensures the transfer of funds to family members in instances of untimely death. 

 

It also saves the beneficiaries from long legal battles to attain the profits locked away in the Demat account. In conclusion, appointing a nominee is not just mandatory but beneficial too. 

 

Complete the nomination before September 30, 2023, to avoid your Demat account getting inactive and frozen for the sale and purchase of securities. The nomination of a Demat account also helps the family members access the Demat account without any hitches.