Guide to Add Nomination in Demat Account

Guide to Add Nomination in Demat Account

The importance of nominee in demat account

Does your demat account have a nominee? You may wonder what is that, but it is so important that today the NSDL and CDSL insist on appointing a nominee for your demat account. In case you don’t want to appoint a nominee, then you need to declare the same. You must be wondering, how to check nominee in demat account. The nominee in demat account is the person on whom this demat account will automatically vest and who can act on your behalf, provided you authorize the same.

One of the first things you need to learn is how to add nominee in demat account online. This is not just a routine activity but meant to save a lot of hassles later on. Demat account nomination is almost mandatory today. The nomination in demat account can be in favour of any person of your choice. In this segment, we will dwell in detail on how to add nominee in demat account. We shall also look at whether the process differs for NSDL nomination online and for CDSL nomination online.

The demat account nominee can be appointed with some very basic documentation with the DP affiliated to NSDL or to CDSL. There is a very basic demat account nomination form that has to be filled up. In case your DP is affiliated to NSDL, then you must fil up the NSDL Nomination form. The process for NSDL nomination and for CDSL nomination is almost the same. It is also suggested that you should familiarize yourself with Demat account nomination rules in elaborate detail.

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Table of Content

  1. The importance of nominee in demat account
  2. All you need to know about nominee for demat account
  3. Online versus offline process of adding nominees to your demat account
  4. How to add a nominee to the demat account offline?
  5. Major advantages of appointing nominee for demat account
  6. Some key thoughts on the Nomination process in demat account

All you need to know about nominee for demat account

As per the latest SEBI circular dated 23rd July 2021, all existing eligible trading and demat account holders shall provide choice of nomination, failing which such accounts will be frozen. In case, nomination is not required, the account holder must declare that explicitly. The deadline for the same has been extended till March 2023. There are 3 things to know.

  1. What is nominee in demat account. The concept of nominee remains the same as in the bank account. Appointing a nominee is about authorizing a person who will be the legal heir(s) to the equity, ETF, debt and mutual fund investments in your demat account and these rights will vest on the nominee in the event of your unfortunate demise. While appointment of nominee is not mandatory, it is ideal to ensure a smooth process of transition of wealth to the next generation.
  2. Is there a limit to the number of nominees that can be appointed. You can appoint between 1 nominee and up to 3 nominees for your demat account. In the case of multiple nominees, you can assign percentages like 50% for A, 25% for B and 25% for C. In case, you don’t mentioned any explicit percentage, the allocation will be equal across multiple nominees.
  3. Does the NSDL or CDSL define who can be a nominee? That is at the discretion of the individual. For instance, the nominee can be your parents, spouse, sibling, children or any other individual as per the choice of the demat account holder. Even a minor can be a nominee but details of his / her guardian will also be required. One restriction is that the nominee can only be individuals. You cannot appoint a corporation, Karta of HUF, or the society or even an APO as a nominee

Online versus offline process of adding nominees to your demat account

The demat account holder has the choice to either add the nominee online or offline. Now, it does not matter if the account was opened offline or online. The choice of nomination offline and online are both available to you either ways. Let us first look at how to add nominee to the demat account online. Here are the steps involved.

  • You first need to log in to your trading cum demat account, either on the web platform or via app downloaded on your smart phone.  Both methods are valid.
  • The nomination option is normally available as a blurb (considering its importance), or you can find it in the profile section.
  • The next step is to click on the ADD NOMINEE button and fill up relevant details of the nominee like name, date of birth, relationship, PAN and allocation. The last item is relevant only in case of multiple nominees.
  • The next step is to authenticate the nominee appointment with electronic signature. This is normally an Aadhar authenticated digital signature, so you need to use your Aadhar number and the mobile authentication via OTP to digitally sign and submit your nomination form online.
  • Once the OTP is entered the process is completed and you would have successfully completed the nomination process online. This process may have minor variations across different brokers, but broadly the process flow is the same.

How to add a nominee to the demat account offline?

The following are the steps to add a nominee offline.

  • The first step is to either download the nomination form from the broker website or get a copy of the form from the broker / DP office and fill it up.
  • Since it is a physical form, you must fill the form of nomination (with the account related details and your physical signature).
  • You can either courier it to the office of the broker / DP with your ID proof self-attested or you can walk into any office or service centre of the broker / DP and submit this form.
  • Remember to carry a self-attested copy of the ID proof and also carry the original for verification.  Remember that nomination are blanket nominations for the entire demat account and you can selectively nominate for certain shares.
  • Can nominee be modified? Yes, any number of times, you can modify your nomination. However, each time, you need to go through the elaborate process in full.
    Click here to know about how to check demat account number.

Major advantages of appointing nominee for demat account

Here are some major merits of appointing a nominee for the demat account.

  • In case of any eventuality leading to the death of the account holder, nomination ensures that the transfer of securities held in Demat account such as shares, bonds, mutual fund units etc can be transmitted smoothly and seamlessly.
  • Your family does not have to run from pillar to post to complete the formalities to claim what is rightfully theirs. Nomination saves a lot of legal hassles later on.

Some key thoughts on the Nomination process in demat account

• Can NRIs appoint nominees to their demat accounts? The answer is YES. Non-resident Indians (NRIs) and even Foreign Nationals having demat accounts, either singly or jointly can appoint a nominee.

• Can a minor be a nominee to a demat account? Yes, a minor can be a nominee but the minor has to be represented by a guardian who is a parent or a court appointed guardian. Guardian has to also submit all documents along with minor.

• Can each holder in joint account appoint nominee? No, there has to be a consensus nominee / nominees and it has to be authorized by all the joint holders in that order.

• Are there any restrictions on who can nominate? Only individual demat account  holders can nominate. Hence, societies, trusts, body corporates, Karta of Hindu Undivided Family, AOP etc cannot nominate.