Securities and Exchange Board of India (SEBI) has partnered with DigiLocker, a government-backed digital document storage platform, to address growing issue of unclaimed assets in India’s securities market and to enhance investor protection.
The initiative aims to improve transparency, streamline financial asset management, and ensure better access to investment details for investors and their families. This new framework will come into effect from 1 April 2025.
Key Highlights of SEBI-DigiLocker Initiative
Access to Demat and Mutual Fund Holdings:
Investors can now fetch and securely store their demat account and mutual fund holdings in DigiLocker, along with their Consolidated Account Statement (CAS).
Expanded DigiLocker Services:
This initiative builds on existing DigiLocker offerings, which already include bank account statements, insurance policy certificates, and NPS account statements.
Simplifying Asset Management for Families:
- Nominee Feature: Users can add nominees to their DigiLocker accounts, granting them access to the investor’s documents after their demise. This will help family members or legal heirs manage the deceased’s financial assets more efficiently.
- Account Status Updates: DigiLocker will update a user’s account status upon receiving information about their demise from death certificates or KYC Registration Agencies (KRAs).
Automatic Notifications to Nominees:
In case of the user’s death, DigiLocker will notify nominees via SMS and email, making it easier for them to initiate transmission process with financial institutions and claim the deceased’s financial assets.
Mandatory Registration for Financial Institutions:
SEBI has directed asset management companies (AMCs), Registrars and Transfer Agents (RTAs), and depositories to register with DigiLocker to allow investors to easily access and fetch their account details.
Role of KRAs:
KYC Registration Agencies (KRAs) will play a critical role by sharing information about investor deaths with DigiLocker to keep the records up to date and minimize unclaimed financial assets.
Investor Awareness and Action Encouraged
SEBI is urging investors to use DigiLocker services and specify nominees for their financial assets. This proactive measure is expected to reduce volume of unclaimed assets in India’s securities market and ensure that the financial assets of deceased investors are efficiently passed on to their rightful heirs.
What are Unclaimed Assets?
Unclaimed assets in securities market often arise due to the following:
- Inactive accounts.
- Non-updated nominee details.
- Lack of timely communication between investors and financial intermediaries.
By leveraging DigiLocker’s secure digital platform, SEBI seeks to address these issues and promote efficient financial asset management.