When an investor dies, a centralised mechanism to ensure fair reporting of the same will govern, a new Sebi’s circular states. The capital markets regulator has introduced this mechanism to ensure reporting and verification in case of investor’s demise, and also to make the process of transmission smooth.
These are the salient features of the new regulations
A. After receiving information about the death of an investor, the concerned intermediary will obtain the death certificate along with the PAN from the notifier.
B. The death certificate needs to be verified either online or offline by the next working day of the receipt.
C. If the intermediary does not have access to the death certificate, it will then intimate the investor or the nominee that the KYC status of the investor has been flagged off as 'on hold' and require them to furnish the death certificate of the concerned investor.
D. And once the death certificate is verified, the concerned intermediary will submit a KYC modification request to the KRA saying that the information on the death of the investor has been received. It will also upload the relevant documents.
Blocking all transactions
A. The intermediary will also block all debit transactions in the account/ folios of the deceased investor.
B. If there is a transaction request received by any intermediary in the account/ folio held by it, it will allow the transaction only after conducting additional due diligence as may be appropriate such as through video call with the investor or in-person verification.
Obligation of the KRA
A. Once it receives a KYC modification request from the intermediary, it will carry out independent validation and verification by the next working day of receipt of request.
B. After validating the death certificate, the KRA will update the KYC record as 'Blocked Permanently' in the system and intimate this updation to all linked intermediaries.
In order to bring uniformity for operationalising the circular, stock exchanges, depositories and AMFI are encouraged to put in place a common operating procedure. This procedure will be made available on their websites as well as that of the intermediaries.
These set of regulations will come into effect from Jan 1 next year.
