Investors can store demat, mutual fund holdings in DigiLocker; check how will it help

In a significant move to enhance investor protection and financial transparency, the Securities and Exchange Board of India (SEBI) has announced its collaboration with DigiLocker, a digital document storage service. This partnership aims to address the persistent issue of unclaimed financial assets in the Indian securities market by enabling investors to securely store and access their demat holdings, mutual fund statements, and consolidated account statements (CAS) through DigiLocker.

The circular outlining this initiative is set to take effect from 1 April 2025, according to SEBI. This development is anticipated to offer considerable benefits to investors and their legal heirs, providing a streamlined method for managing financial documents.

DigiLocker users will soon be able to fetch and store statements of their demat accounts, including shares and mutual fund holdings, as well as their CAS. This initiative is an extension of DigiLocker’s existing services, which currently include bank account statements, insurance policy documents, and National Pension System (NPS) account statements. By expanding its capabilities, DigiLocker aims to provide a comprehensive solution for managing various financial documents, thereby enhancing the level of convenience and accessibility for users. The collaboration is expected to significantly reduce the incidence of unclaimed assets by making it easier for investors to maintain and access their financial information.

SEBI has issued directives to asset management companies (AMCs), registrars and transfer agents (RTAs), and depositories to register with DigiLocker. This will allow investors to fetch their mutual fund and demat account details efficiently. 

A key component of this initiative is the introduction of a nomination facility within DigiLocker. Investors will be able to appoint Data Access Nominees, who will be granted read-only access to their DigiLocker accounts in the event of the account holder's demise. This feature ensures that legal heirs can easily access essential financial information, thus simplifying the process of asset transition. Upon an investor’s death, the KYC Registration Agencies (KRAs), which are regulated by SEBI, will notify DigiLocker. Subsequently, the system will automatically alert the appointed nominees, enabling them to initiate the asset transmission process with the relevant financial institutions, thereby ensuring a smooth transition of assets.

KYC Registration Agencies (KRAs) will play a crucial role in this process by acting as the primary verification entities. They will be responsible for ensuring the seamless execution of nominee notifications and facilitating the transition of assets. Their involvement includes verifying user details and triggering alerts to Data Access Nominees. This collaborative effort between SEBI and DigiLocker is expected to provide enhanced protection to investors, minimising unclaimed assets and ensuring that financial information remains accessible and organised.

KRAs will be tasked with sharing information about investor deaths with DigiLocker to facilitate the transition process. By addressing issues like dormant accounts and the lack of updated contact or bank details, SEBI aims to significantly reduce unclaimed assets in the securities market and optimise transmission norms, thereby fostering a more transparent and accessible financial environment for investors.