How to add a nominee to my Demat account online and offline process

A dematerialised Account or Demat account is used for holding securities and shares in a digital format. The Demat account holds shares and securities. It helps investors track their investments in bonds, shares, mutual funds, and exchange-traded funds under one umbrella. Besides, they can cover the physical shares in digital modes.

The digitisation process of the Indian stock trading for investors with a Demat account gets better governance. Also, it helps reduce the risks of theft, damage, malpractice, and storage by storing securities in a digital format. Back in those days, opening an account was a challenging process that took several days for activation. But today, with the introduction of Demat accounts, you can perform the task within 5 minutes.

There are two organisations maintaining the Demat accounts, and they are National Security Depository Limited (NSDL) and Central Depository Services Limited (CDSL). But why would you ever need a nominee added to your account? If yes, how to add nominee in demat account? On that note, here’s explaining the role of the nominee.

Who Is The Nominee?

Your nominee is the individual whom the investor designates to get assets and related securities after the demise of the account holder. The account holder might make an individual the nominee at any point in time. Nominating someone to get the assets of your Demat account requires trust. After all, you are giving the responsibility to someone who will take care of your assets after you bid farewell to this world.

Now that the Securities and Exchanges Board of India has announced it mandatory, every Demat account holder needs to consider it. As far as the report is concerned, the Securities and Exchanges Board of India announced on July 23, 2021, that the existing eligible Demat and Trading account holders need to offer a choice of their nomination by March 31, 2022. Any failure would lead to accounts that are being frozen for debits. But later on, they extended this deadline and proposed that any failure after September 30, 2023, would lead to a frozen account for debts.

Investors may log in with the 2-factor authentication for depository participants or stock brokers to withdraw or submit the nomination demat account. The ID details of the guardian or nominee of minor nominees, email ID, and mobile number have now become optional. On the other hand, the DEMAT account holder should sign the declaration form.

Suppose the account holder uses a thumbprint rather than a signature. In that case, there’s no need for any witness signature while filling out the nomination or the declaration forms with the help of an electronic signature.

It is advisable for investors to take the procedure and complete it within the given deadline. It helps them avoid the complications associated with trading shares in this market. When a nominee is added to the Demat account, the holdings of the investors remain protected during any unforeseen conditions.

Eligibility Criteria To Be A Nominee For A DEMAT Account Holder

Just like it happens in your bank’s savings account, the DEMAT account also needs a nominee under your account’s name. You need to authorise the person who is going to be the legal heir of the investments in any unfortunate situation (sudden demise) where you would no longer be able to handle your account. In such circumstances, the authorised individual takes in charge of your account and may reap the benefit of the account.

In short, you can nominate a total of three nominees to the DEMAT account. In addition, you also can assign some percentage to every nominee in the account. Take an example to understand the matter more clearly. Suppose you have chosen three nominees. You aim to give 30% to the first one, 20% to the second one, and 50% to the third one. You can do that according to your wish with your DEMAT account. Now, here goes the million-dollar question: who can be your nominee in the DEMAT account?

To be eligible as a nominee for your DEMAT account, your chosen candidate needs to be a relative. While choosing the nominee, ensure you consider the following things:

Your nominee should be a mother, father, siblings, spouse, children, or any other individual.

Any minor candidate might also be added as the nominee, but in that case, they need to give their guardian’s details.

Note that you would not be able to appoint non-individuals such as Karta of HUF, a corporation, or a society as the nominee. They must be real people who are somewhere connected to your family or friend circle.

A Comprehensive Guide To Add Nominee To Your DEMAT Account: Steps To Follow

Are you planning to add one or more nominees to your Demat account? Now is the right time to consider reading the below-offered points. Read each step to add your nominee’s name online and offline.

The Online Process

The following are the steps on how to add nominee in demat account online:

• 1st step: The first step is to go to the broker’s official website.
• 2nd step: Now, you need to log into the online account by using the client ID as well as MPIN. Wait for the OTP and dial it on the screen.
• 3rd step: After this, you need to go to the section that mentions ACOUNT of this portal.
• 4th step: After this, you need to tap on the “Profile” option under your account section
• 5th step: The next step requires clicking on the option that mentions: “View All Categories – Details of Nominee and more.”
• 6th step: After this, you need to tap on the “Nominee” option. You can check it on the next page
• 7th step: After this, you are required to tap on the option that mentions Add Nominee
• 8th step: Now, it is time to fill in the details such as your nominee’s name, birth date, PAN card number, relationship with your nominee, percentage you want to share, and other information. The total percentage you share among your nominees must be equal to 100%
• 9th step: Upon this, if you select two or more nominees, click on the add button and put the details accordingly.
• 10th step: After you complete including your nominees’ names, it’s time to tap on the button that mentions: “Submit E-Sign.”
• 11th step: Now you have reached e-Signature. It’s a portal where you need to be asked to authorise your e-signature service. Check the box present right at the top to get further details.
• 12th step: After this, you have to enter the Aadhaar number or the Virtual ID.
• 13th step: Now is the time to tap on the “Send OTP” option. Here, you need to enter your OTP. So, wait for the OTP to be sent to the registered email ID or phone number. After giving the OTP, you need to “Verify OTP.”
• 14th step: Lastly, you need to wait for the review of your nomination addition request. It takes around 2 to 3 working days.

The Offline Process:

If you wish to follow the offline process, you can fill up the nomination form. For this reason, you need to include the physical signature and account-related details. Courier the form to the head office’s address of your broker. In addition, a copy of your ID proof is required. After your nominee for the DEMAT account gets added, a nomination will be applied to the assets under your account.

Steps to Switch The Nominee for the DEMAT Account

If you wish to switch the nominee for your account, the following are the steps involved:

• 1st step: When you wish to switch the nominee, you must pay Rs. 25 in addition to 18% of the GST charges.
• 2nd step: You need to provide hard copies of the nomination form alongside the account modification form.

Advantages Of Adding A Nominee To Your DEMAT Account

With the emerging investor community in India, there are more people shifting to stock market investments. Besides growing their wealth, they invest in the stock market because it has become a lot safer than in previous years. Modern-day investors depend on the nomination procedure in the DEMAT account. After all, it ensures a smooth wealth transfer among the heirs or loved ones. That’s where the importance of adding nominees to your DEMAT account comes into being. If you want to add nominees to your account, understanding your limitations is imperative. The only thing you need to keep in mind is to avoid over-reliance on the process.

Altogether, nominating your loved ones to the account comes with a myriad of benefits. From allowing your close to take care of your assets after your demise to securing the account, there are loads of advantages. Your legal heirs can get your assets without legal complications, thereby avoiding delays associated with the transfer of securities. In addition to that, nominees can help with estate planning, which is, again, a secure future for the whole family. The following are a few reasons why it is important to nominate trustable individuals to your account as nominees:

• After your sudden death, a nominee can transfer the assets in a secure manner. These include mutual funds, shares, bonds, and more.
• Without a nominee, you may end up causing disputes amongst your legal heirs concerning the account’s inheritance. So, appointing a nominee gives you the utmost peace of mind: you know that your assets are secure with your loved ones after your death.
• Another benefit is that it also saves the account holder’s legal heirs from lengthy processes associated with collecting or submitting documents such as no objection certificates, affidavits and more.
• Lastly, considering the custodian’s client, clients need to decide on the beneficiary before the custodian trades on behalf of the client. It does not matter whether you have an active or inactive nomination agreement.

Things To Keep In Mind When Adding A Nominee To Your Demat Account

A few things should be kept in mind when you add the nominee to your account:

• You need to be a joint or single account holder (note that non-individuals such as body corporate, partnership firm, holder of power of attorney, or Karta of HUF don’t qualify for this).
• If you have a joint account, both account holders need to sign the nomination form.
• As soon as you assign someone as your account’s nominee, it is imperative to decide your rights.
• You can nominate a minor, too, but minor beneficiaries won’t be able to assign nominees. The name and physical address of the minor’s guardian are required.
• You can consider the CDSL nominee update by removing or modifying your nominees anytime. You just have to fill up a form and submit it to the stock broker/depository participant. Alternatively, you may also change it online through the broker’s website.

Wrapping Up

So, this post has enlightened you on how nominees help ensure a speedy and seamless transfer of assets to the legal heir during an unfortunate circumstance. From saving time to keeping families secure financially, this process does it all. Are you a budding investor who has just started the stock market journey? Then now is the right time to add your nominee and complete your onboarding procedure using our web application or stock market app. Consider the steps on how to add nominee in demat account mentioned in this post to proceed further.

Frequently Asked Questions

Do you need to add a nomination to your demat account?

 

According to the SEBI circular, it has now become compulsory to nominate someone for the demat account or explicitly opt-out. If you are a demat account holder, you should include the nominee details to avoid the account getting frozen for debits.

 

What if the account holder dies without any nomination?

If there are no nominees in the demat account of the deceased, there will be the legal testament made by its primary account holder.

Is there any negative impact of not having a nominee in the demat account?

 

Yes, if you do not have a nominee added to your demat account or fail to add one, you will never be able to trade your shares, and your demat account will become inactive.