Mutual Fund Transmission
The process of transferring mutual fund units from a deceased investor's folio to a nominee or legal heir, governed by SEBI and AMFI guidelines, with distinct procedures for registered nominees versus transmission to legal heirs through succession documents.
Mutual fund transmission was the procedure by which units held in a folio were transferred to the appropriate claimant upon the death of the folio holder. It was distinct from the redemption of units (which extinguishes the units and pays cash) — transmission transferred the units themselves, preserving the investment.
The process bifurcated based on whether a nominee had been registered in the folio. Where a valid nomination existed, the nominee submitted a transmission request to the AMC or RTA with supporting documentation: a notarised copy of the death certificate, identity proof of the nominee, a bank account details form, and a nominee claim form. AMFI's standard transmission form was accepted across all AMCs, simplifying the process. AMCs were required by SEBI to process the transmission within seven working days of receiving complete documentation.
Where no nomination was registered, or where the claimant was not the registered nominee (such as when a legal heir disputed the nomination), the process required obtaining a succession certificate from a competent court, a probate of will, or in cases of small amounts (below ₹2 lakh as per AMFI's simplified transmission norms), an indemnity bond and affidavit. AMFI periodically revised the threshold for simplified transmission procedures.
SEBI and AMFI strongly encouraged folio nomination, and SEBI's 2021 circular made nomination mandatory for new individual investor folios, with opt-out available by submitting a declaration. Existing folios without nominations were required to either register a nomination or submit a declaration by a prescribed date to maintain transactional access.
Joint folios had specific rules: upon the death of the first holder, the second holder could request removal of the deceased holder's name and continue the folio, with no transmission required. Only upon the death of the sole surviving holder did the formal transmission process become necessary. The transmitted units retained the original cost of acquisition for capital gains computation purposes.