SEBI Launches Centralised Mechanism To Report Death of an Investor, Transmission of Account to Nominees

Moneylife Digital Team 04 October 2023

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has launched a centralised mechanism for reporting the demise of an investor through KYC (know-your-customer) registration agencies (KRAs).

Spelling out the operational norms, for the obligations of regulated entities, including registered intermediaries that have an interface with investors or account-holders (used interchangeably) who are natural persons, SEBI says intermediaries would verify the death certificate.

After receiving information about the death of the investor, the intermediary will obtain the death certificate with a copy of the deceased investor's permanent account number (PAN). It will then verify the death certificate online through the website of the certificate-issuing government authority or offline through the original seen and verified (OSV) process.

In case the joint account-holder or nominee, legal representative or family member of the deceased investor does not have access to or is not in a position to obtain and submit the death certificate, then the intermediary should flag the account as 'on hold' and seek the death certificate of the investor and carry out verification.

After verifying the death certificate, the intermediary would submit a KYC modification request to the KRA with 'information on the death of investor received and death certificate verified' and also upload the relevant documents. It would also block all debit transactions from the account or folios of the deceased investor.

"It is noted that for joint accounts, the specified mode of operation should be adhered to, and if the account is operated on either or survivor, or anyone or survivor (i.e. modes other than joint mode), the account operation in such mode shall continue," SEBI says.

If the intermediary does not receive a death certificate, it will submit a 'KYC modification request' in the KRA system, 'information on death of investor received; confirmation awaited'.

After receiving a KYC modification request from the intermediary, SEBI says the KRA will perform independent validation and verification using details available in its system and source validation or verification wherever feasible or contact other linked intermediaries to check if they have any updates in this regard and the status of the account maintained by them.

After validation of the death certificate, the KRA will update the KYC record as 'blocked permanently' in the system and intimate this updation to all linked intermediaries. Once the account of the deceased investor is labelled as permanently blocked, the intermediaries will inform the notifier or nominee within five days about the procedure for transmission. It will also provide the transmission request form and the list of documents required. In the case of a joint account, the intermediary would inform the surviving joint account-holder about the process for transmission.

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