SEBI's circular on centralized mechanism for reporting the demise of an investor through KRAs

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In case an investor passes away, the family members of the investors have to go through a lot of difficulties in getting the claims of holdings like Equity and mutual fund units that the investor holds. To smoothen this process, SEBI has decided to introduce a centralized mechanism for reporting and verification in case of the demise of an investor.

Highlights from the circular issued by SEBI around this:

  • Upon the demise of an investor, nominee(s) appointed by the investor, legal representative, family members, or joint account holders (in case an investor holds a joint account), can report it to intermediaries like Stockbrokers, KYC Registration Agencies (KRA), Depositary Participants (DPs), AMCs, Exchanges, etc.

  • Once the intermediaries are notified of the demise of the investors, they will then have to obtain the death certificate along with the PAN of the deceased from the notifier and do the verification of the death certificate by the next working day of its receipt.

If the intermediary is unable to obtain the death certificate, after receiving information about the demise of the investor from the notifier; It should inform the joint-holder, notifiers, or nominees that the KYC status of the investor has been flagged off as “On Hold” and require them to provide the death certificate of the concerned investor.

Once the death certificate is verified, the intermediary has to (on the same day of verification):

Block all debit transactions in the account/folios of the deceased investor.

Submit a ‘KYC modification request’ to the KRA that “information on the death of investor received; death certificate verified” and also upload the relevant documents

In case the death certificate is not received, the concerned intermediary should (by the next working day of the intimation):

Submit a ‘KYC modification request’ in the KRA system, “information on death of investor received; confirmation awaited”.

Obligations of the KRA:

The KRA, upon receipt of ‘KYC modification’ request from the intermediary, should carry out the following steps;

Independent validation and verification by the next working day of receipt of modification request:

Contact other linked intermediaries also to check if they have any updates in this regard and the status of the account maintained by them.

Upon validation of the death certificate, the KRA shall update the KYC record as “Blocked Permanently” in the system and intimate this updation to all linked intermediaries.

Upon receipt of notification from KRA as “Blocked Permanently”, all intermediaries should:

Immediately block all debit transactions in the account/folios of the deceased investor.

Intimate the notifier/nominee, within 5 days about the procedure for transmission, and provide the transmission request form and the list of documents required for the transmission.

In the case of joint account/s, the intermediary should intimate the surviving joint account holders.

3 Likes
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Thanks for the information @Meher_Smaran

The best way is to inform your spouse and your kids about your Demat account – all your financial holdings (bank accounts, FDs etc) and insurance. They should know how to log in to your Demat account. ONLY THEY – your spouse and kids – NO ONE ELSE.
Why?
If something happens to you – they can log in and sell all the holdings, close all trades if any and withdraw all the money to the linked bank account.
That’s it. No human intervention or legal proceedings are required. No death certificate no procedure required.

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I am no expert but this will become a huge pain if you ever need to close the account for whatever reason. Since you have executed trades after the demise.

Better to just go through proper channels.

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My wife logs in to my account sometimes when I am in the office – whether I am alive or not the software does not know. Is that illegal or painful? Hope you get the point.
Anyway, I just wanted to help people. Rest whatever they want to do.

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I am guessing software will throw error when you try to assign a close date and have trades post that. But I am not expert either way. I faced this issue in a bank for my grand mom. transactions post demise so bank couldn’t close the account with the death certificate as proof.