Introducing online nomination

Hindi: इस पोस्ट को हिंदी में पढ़ने के लिए यहाँ क्लिक करें।

You can now add single or multiple nominees to your trading & demat account completely online on Console. We will alert your nominee(s) over email/SMS if your account becomes dormant after one whole year of inactivity and you do not activate it by performing reKYC in time in response to the notifications we send you. This is to ensure that your nominee(s) are informed of the existence of your trading & demat account and the nomination in case of any unfortunate eventualities.

Background

While the demat account opening became digital in 2016 (using Aadhaar eSign), adding nominees has been a physical process until now. This is because the process of nomination that the MCA defined mandated the collection of a physical form and multiple witness signatures. The regulation around this changed very recently, with SEBI allowing an option to add up to 3 nominees to your trading & demat account completely online using eSign.

When you open an account with a broker, you open two types of accounts:

• A trading account that is registered with the Exchanges (NSE, BSE, MCX). This is the account where you hold your funds & F&O positions. If there has been no activity in your trading account, the funds will be transferred back to your Bank account as part of the Quarterly settlement, and the nomination that applies to your Bank account would hold valid for such funds. If for any reason, the funds are still lying in the trading account, they can be transferred to the nominee. F&O open positions can’t be transferred, so they will be liquidated and settled before the funds can be transferred to the customer bank or to the nominee.
• A demat account that is registered with the Depository (CDSL at Zerodha). This is the account where you hold your securities in demat or electronic form. Securities once in a demat account can stay here forever unless you sell or transfer them to another demat. So it is important that you add a nominee to this account. Along with adding a nominee, it is also important to keep the nominee informed that you have a demat account, similar to a bank account. As mentioned earlier, we will alert the nominee on the email/mobile provided by you during nominee registration if your account turns dormant after a year of inactivity and you do not come back and enable it by doing a reKYC in time.

Why do the nominees have to be alerted?

A recent survey showed that there is a corpus of over Rs. 82,000 Cr lying in unclaimed deposits in India. This is a conservative estimate and includes:

• Unclaimed Provident Fund Accounts – Rs. 26,497 Cr
• Unclaimed Bank Accounts – Rs. 18,381 Cr
• Inactive Mutual Fund Accounts – Rs. 17,880 Cr
• Unclaimed LIC Policies – Rs. 15,167 Cr
• Matured Fixed Deposits – Rs. 4,820 Cr
• Unclaimed Dividends – Rs. 4,100 Cr

These are unclaimed, most likely because the nominees don’t know of the existence of these assets. We hope that the alert feature will act as a backup for all our customers in case of any unforeseen eventualities.

Also, since we offer direct mutual funds in demat form on Coin, this nomination will automatically cover all your mutual fund holdings along with all your other securities held with us as well.

How to add a nominee

You can do this by visiting Console. If you are adding multiple nominees, make sure to mention the % of holding that you want to allocate to each nominee so that the sum total is 100%.

• You will need Aadhaar linked to your mobile number to receive the OTP and eSign.
• You need to upload the proof of identity of the nominee in PDF format. If you don’t know how to convert your image from JPG to PDF, check this article.
• Once you have completed the above process, nominee addition to the account can take up to 48 hours. You will get an email from us as well as from CDSL (Depository).
• For your privacy, no email notification is sent to the nominee(s) immediately. An alert is sent only when the account becomes dormant after one year of inactivity, and you fail to enable it even after multiple alerts from our side.
• Once you have added one or more nominees, you cannot modify it or add a new nominee online. You will need to send us a physical nomination form. We are working with CDSL (depository) to make this online as well. Nomination is free for the first time, and Rs 25+GST is charged for modifications.
• Non-individual accounts (including HUFs) cannot have nominees. Joint accounts will need to send the physical nomination form.