Sebi introduces mechanism for intermediaries reporting demise of an investor

The capital markets regulator has also put in place operational norms, including the obligations of regulated entities, including registered intermediaries that have interfaces with investors or account holders who are natural persons.

The market regulator said after “receiving the intimation about the demise of an investor, the concerned intermediary will have to obtain the death certificate along with the PAN from the notifier or nominee and verify the death certificate, the next working day of its receipt, through online or offline mode”, the circular read.

“The intermediary shall treat the ‘Original Seen and Verified’ (OSV) of the death certificate accompanied with the PAN of deceased investor, received electronically along with the credentials of the notifier (including his / her PAN) and the validation report from an Investor Service Centre (ISC) of the Stock Exchange or Depository (MII) 3 , to be on par with its own OSV.”

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“If the concerned intermediary, after receiving information about the demise of the investor from the notifier or nominee after inferring the same, does not have access to or is not in a position to obtain the death certificate, then it will inform the nominee (s) 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.” the circular added.

The Sebi circular further read “after verification of the death certificate, the concerned intermediary will have to, on the same day of verification, submit a KYC modification request to the KRA that “information on death of investor received; death certificate verified” and also upload the relevant documents.” 

The intermediary will have to block all debit transactions in the account or folios of the deceased investor, the circular added.

In case the death certificate is not received, the intermediary will have to submit a KYC modification request–by the next working day of the intimation–in the KRA system –“information on death of investor received; confirmation awaited”.

Obligation of KRA

The market regulator said the KRA, upon receipt of ‘KYC modification’ request from the intermediary will carry out independent validation and verification by the next working day of receipt of modification request.

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

In order to have uniformity for operationalizing, the Stock Exchanges, Depositories and industry associations like Association of Mutual Funds in India (AMFI), Registrars Association of India (RAIN) etc. in consultation with stakeholders including KRAs, will put in place common Standard Operating (SOP). The SOP should be made available on their websites as well as that of the intermediaries.

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Updated: 03 Oct 2023, 07:48 PM IST