For all mutual fund investors, linking the permanent account number (PAN) to Aadhaar before March 31, 2023, is a mandatory procedure now.
Furthermore, an investor is also required to submit the details of nominations of the mutual fund portfolio before the deadline. In a scenario where an investor fails to adhere to these guidelines, there is the likelihood of freezing of the mutual fund account and stoppage of transactions.
A failure to comply with the linkage of PAN and Aadhaar could lead to all financial transactions in the mutual fund portfolios being prohibited effective from April 1, 2023, onwards. The transactions related to fresh or additional purchases, and systematic investment plans (SIPs) cannot be carried out without the PAN-Aadhaar linkage.
Also, ongoing SIPs are also likely to be stopped. In addition, switching funds from one investment scheme to another will also be prohibited.
Mutual fund unitholders need to nominate an individual to claim the units or the redemption proceeds in the eventuality of the demise.
Markets regulator the Securities and Exchange Board of India (SEBI) has made it compulsory for all new unitholders to submit either the nomination form or the declaration in case they are opting out of nomination from October 1, 2022, onwards.
The markets regulator has also made nomination compulsory for existing mutual fund folios, including the jointly-held mutual fund accounts.
Mutual fund unitholders can choose their nominees or opt out of nomination using the online or offline mode provided by their asset management companies (AMC) or fund houses.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.
