Mutual funds: The Securities and Exchange Board of India (SEBI) has recently announced some tweaks in the nomination process for mutual fund accounts. As per the new directive, the nomination for joint accounts in mutual funds will be optional. This move comes as part of SEBI's ongoing efforts to streamline regulations and provide greater flexibility to investors. With this, nomination for joint accounts will be optional. Investors now may and may not nominate beneficiaries. They can opt out of the nomination process altogether. However, it's important to note that for single mutual fund accounts, the nomination requirement remains unchanged. The Sebi, in its master circular on May 19 last year, required investors to nominate a nominee or opt out of the nomination process. Following this, the capital markets regulator formed a working group to look into the regulatory framework of mutual funds, wherein investors are required to choose one of the two options (give nomination or opt out) before June 30 this year. Sebi also caried out public consultations to review this requirement and a set of guidelines were released. Analysing the pros and cons, Sebi in a recent note announced that it is no longer mandatory to provide nomination details the jointly held mutual fund folios. This decision was conveyed through a circular released by Sebi on April 30 and signed by Peter Mardi, Deputy General Manager in Investment Management Department. According to the Sebi circular, “It has been decided that the requirement of nomination specified underclause17.16 of the Master Circular for Mutual Funds shall be optional for jointly held Mutual Fund folios.” It added: “All other provisions related to requirement of nomination as provided in SEBI Master Circular No. SEBIHOIMDIMD-PoD-1PCIR202374 dated May 19, 2023and SEBICircular No. SEBIHOMIRSDPOD-1PCIR2023193 dated December 27, 2023, shall remain unchanged.” In the same circular, the regulator stated that a working group established by Sebi reviewed mutual fund regulations and recommended steps to facilitate ease of doing business. Several actions were taken. Additionally, SEBI allowed fund houses to have a single fund manager to oversee commodity and foreign investments. This would reduce the cost of managing the fund. These came after a working group constituted by SEBI reviewed mutual fund regulations and recommended measures to promote the ease of doing business. In a separate circular, the regulator has eased the current provision with respect to dedicated fund managers. SEBI said that for commodity-based funds such as Gold ETFs (exchange-traded funds), Silver ETFs and other funds participating in the commodities market, the appointment of a dedicated fund manager would be optional. Also, the appointment of a dedicated fund manager for making the overseas investments would be optional. The appointment of a single fund manager for domestic and overseas commodity funds is intended to reduce the cost of managing the fund.
