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Once it has been ascertained that the investor has indeed passed away, the intermediary will permanently block all debit transactions taking place from the accounts or folios of the deceased investor on the same day. This blocking will also include all non-financial transactions as well.
Market watchdog SEBI has proposed a new centralized mechanism that entrusts stockbrokers and other stock market intermediaries with the responsibility of updating records post an investor’s death. The circular will be effective starting 1st January, 2024.
Whichever intermediary first receives information of the investor’s demise through the deceased’s legal representatives, nominees or via those they held a joint account with, they should obtain the PAN of the deceased and verify the death certificate, either online or offline. This verification should be completed within one day of receiving the certificate.
In case of offline verification, the intermediary will authenticate the original death certificate seen by them. If the same is received by them electronically, along with PAN number of the deceased investor and a validation report from an Investor Service Center of stock exchange/depository, it will be treated at par with the offline verification undertaken by intermediary.
Many times, getting hold of the death certificate might not be possible. In this scenario, the intermediary will inform the nominee/legal representative of the deceased investor that their KYC status has been marked as on-hold, and will be processed once the death certificate is received.
Once it has been ascertained that the investor has indeed passed away, the intermediary will permanently block all debit transactions taking place from the accounts or folios of the deceased investor on the same day. This blocking will also include all non-financial transactions as well.
In case any transaction request is received on an account or folio that has been marked as on-hold, the same will only be approved after conducting due diligence. This would include an in-person verification or video call to establish that the investor is alive. And in case the investor is alive, the intermediary will immediately have to submit a KYC modification request.
If possible the concerned intermediary or KRA should independently confirm the information, and update others about it as well.