Nomination can speed the release of Indian mutual funds, demat holdings and bank deposits after an investor’s death, but a valid will and succession documents still determine who ultimately owns them.
For non-resident Indians with mutual fund folios, demat accounts and bank deposits in India, the paperwork facing their families after death can quickly become complex, particularly when heirs live overseas and documents must be notarised or otherwise attested. The practical answer, according to the framework discussed by Kuvera and reinforced by the Securities and Exchange Board of India’s January 10, 2025 circular, is to treat nomination and succession as two separate steps rather than one: a nominee helps the institution release the asset, while a will and inheritance law decide who ultimately owns it.
That distinction matters because SEBI has made clear that a nominee is not the final owner of an investment held in a demat account or mutual fund folio. Instead, the nominee receives the asset in a trustee-like capacity for the legal heirs, and the institution is not expected to settle disputes between competing claimants. SEBI’s revised rules, which were designed to cut down on unclaimed assets, also allow investors to name as many as 10 nominees in a single folio or demat account, with each person assigned a percentage share.
The updated nomination rules also require more precise record-keeping. Business Standard reported that investors now need to provide nominee details such as PAN or Aadhaar, alongside full contact information, which should help institutions process claims more quickly when family members are dispersed across countries and time zones. Industry guidance also notes that investors should review nominations after major life events, such as marriage, the birth of a child, a death in the family or a change in residence, because stale records can slow settlements and leave relatives to assemble paperwork from scratch.
A will remains just as important. Indian succession rules differ according to religion and personal law, so a nomination alone does not settle ownership. If there is no valid will, heirs may have to rely on succession certificates or heirship documents, which can become more cumbersome when the claimants live abroad. For families with assets spread across jurisdictions, lawyers and advisers often recommend keeping a clear inventory of all holdings and naming an executor who can handle filings in India.
For heirs living outside India, the inheritance itself is generally permitted under foreign exchange rules, but the transfer and eventual repatriation of sale proceeds are subject to compliance requirements. The inherited securities are usually moved into an NRO-linked account or folio, and the heir typically needs a PAN before the assets can be handled. Kuvera notes that repatriation from an NRO account is generally capped at the equivalent of $1 million a year, subject to tax compliance, and that any sale later on may attract capital gains tax and withholding. India does not levy inheritance tax, because estate duty was abolished in 1985, but the tax position in the heir’s country of residence may still matter.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
