10.11 Non-Financial Transactions, Special Investor Categories and Turnaround Times

What Counts as Non-Financial

A non-financial transaction changes information in the folio without changing the value of the holding.

Change of bank mandate is the most sensitive of these, because a fraudulent change would redirect an investor's money. It therefore requires verification of both the old and the new account and is subject to a cooling period at some fund houses, during which redemption to the newly added account may be restricted.

Nomination

The framework was substantially revised with effect from 1 March 2025.

• Up to ten nominees may be registered per folio, with the percentage share specified for each
• Every investor must either nominate or sign a declaration opting out — one or the other is required
• Joint holders are not obliged to nominate but may do so
• Under the rule of survivorship, assets in a jointly held folio pass to the surviving holders, without affecting existing nominations or the mode of operation
• A power of attorney holder cannot make the nomination on the investor's behalf; the investor must declare the nominee

Nomination is not a substitute for a will and does not override succession law, but it makes transmission dramatically simpler for the family, and it costs nothing. A distributor who ensures every client folio carries a valid nomination has done more practical good than most portfolio adjustments achieve.

Transmission

Transmission is the transfer of units on the death of a unitholder — distinct from transfer, which is a voluntary disposition between living persons.

Documents typically required include the death certificate, the transmission request form, KYC of the claimant, bank details of the claimant, and, where there is no nominee, succession documentation such as a will with probate, a succession certificate or a legal heirship certificate together with an indemnity for smaller amounts.

The contrast is worth stating to clients plainly: with a nominee, transmission takes weeks; without one, it can take many months and involve court process.

Change in Status of Special Investor Categories

Several status changes require folio action and, in most cases, freeze transactions until documentation is complete.

Minor attaining majority

Covered in section 10.5 and the most examined of these. On the eighteenth birthday the folio is frozen, standing instructions cease, and the now-major investor must submit fresh KYC, PAN, bank details in their own name and an attested signature. The guardian's authority ends on that date.

Resident becoming non-resident

The investor must inform the AMC and update the folio status. Bank details must change to an NRO or NRE account, KYC must be updated to non-resident status, and the tax treatment changes — most significantly, TDS begins to apply to capital gains under section 195. Existing systematic instructions may need re-registration against the new bank account.

Non-resident becoming resident

The reverse: status updated to resident, bank details changed to a resident account, and TDS on capital gains ceases.

Change in constitution of a non-individual investor

A change of partners, directors or authorised signatories requires fresh authorisation documents and specimen signatures, without which instructions cannot be acted upon.

Change in KYC status

An investor moving to on-hold status cannot transact until the deficiency is regularised.

Investor Transactions: Turnaround Times

SEBI and AMFI prescribe turnaround times so that service standards are measurable rather than a matter of each fund house's practice.

Non-financial requests such as address, bank mandate and nomination changes are processed within the timelines published by each AMC and RTA, generally a few business days, with bank-mandate changes taking longer because of the additional verification.

Why Turnaround Times Matter to a Distributor

Most investor dissatisfaction is about speed, not about returns. An investor who knows redemption proceeds take three working days waits calmly; one who expected the money the same evening starts calling on day one.

Setting the expectation at the point of the request — "this will be with you by Thursday" — is the single cheapest service improvement available, and it depends on knowing the numbers in the table above.