SEBI Circular

Why SEBI’s DigiLocker Move is a Game-Changer for Indian Investors?

Securities and Exchange Board of India (SEBI) has recently integrated DigiLocker to help investors securely store and manage their financial documents. This move aims to strengthen digital public infrastructure, making it easier to access demat and mutual fund details.

A major advantage is the reduction of unclaimed assets, often caused by incomplete nomination formalities or lack of awareness among legal heirs. By ensuring secure storage and seamless access, this initiative enhances financial transparency and helps investors identify and manage their assets efficiently.

This article discusses SEBI’s circular dated March 19, 2025, outlining how DigiLocker benefits investors in securely managing their investment records.

What is the SEBI-DigiLocker Partnership Circular All About?

On March 19, 2025, the Securities and Exchange Board of India (SEBI) issued a circular titled “Harnessing DigiLocker as a Digital Public Infrastructure for Reducing Unclaimed Assets in the Indian Securities Market” on its official website ad it is set to take effect from 1^st April 2025.

The circular aims to address the issue of unclaimed financial assets by allowing investors to store, access, and manage information on their demat and mutual fund holdings through DigiLocker. This initiative enhances financial transparency and ensures easier navigation of investment records.

Some of the key highlights of this circular are as follows:

• Access to Securities Holdings
  DigiLocker users can now easily retrieve detailed information on their shares and mutual fund holdings from their demat accounts, along with the Consolidated Account Statement (CAS). This expands DigiLocker’s existing financial services.

• Nomination Facility for Seamless Access
  Users can appoint nominees within the DigiLocker application. In the event of the user’s demise, the nominee will receive read-only access to the account, ensuring legal heirs can access essential financial information.
• Automated Notification to Nominees
  When a user’s demise is reported by KYC Registration Agencies (KRAs) registered with SEBI, DigiLocker will automatically notify the nominee, enabling them to initiate the transmission process with financial institutions.

• Role of KYC Registration Agencies (KRAs)
  KRAs serve as the primary authority for verifying user status and triggering nominee notifications, ensuring a smooth and secure transition process.

 What is DigiLocker?

DigiLocker is a government-backed digital platform that allows Indian citizens to securely store and access important documents like Aadhar Card, PAN, Driving License, and Death Certificate. These documents are legally recognized as originals under Section 9A of the Information Technology Act, 2000.

With SEBI’s recent circular, DigiLocker is set to revolutionize document management for Indian investors, making financial transactions more secure, transparent, and hassle-free.

Why SEBI-DigiLocker Partnership Circular is Important?

The SEBI-DigiLocker partnership aims to address the long-standing issue of unclaimed financial assets in the Indian securities market. By providing a secure digital wallet for managing financial documents, this initiative reduces paperwork and enhances efficiency.

With proper planning, investors can save time by streamlining document access. Often, disputes arise due to lack of access, improper nominations, or unawareness. DigiLocker helps prevent such issues by ensuring secure storage and easy retrieval of essential financial records.

This collaboration marks a progressive step toward financial transparency and investor protection. By enhancing accessibility in asset management, it reduces the risk of financial assets being lost or left unclaimed, encouraging more investors to participate in the digital economy.

Additionally, this digital transformation simplifies the inheritance process, making it easier for legal heirs to access financial assets. As a result, this initiative could be a game-changer for investors in India.

The objectives of SEBI with this new Mechanism are as follows:

• Prevent unclaimed investments
• Provides easy access to the deceased investors’ financial documents by the authorized nominee’s
• It establishes a digital ecosystem that seamlessly integrates KYC data, death notifications, and nominee access, ensuring a more efficient and secure financial management system.

What are the Features of SEBI DigiLocker Partnership?

The features of SEBI DigiLocker partnership are as given below:

• Access to Financial Holdings on DigiLocker

Investors in India can now download and store mutual fund holding statements, demat account holding statements, and consolidated account statements (CAS). This overall provides a centralized view of all investments enabling systematic financial planning.

• Nominee Access Made Easy

SEBI’s introduction of DigiLocker nominees is a unique concept, distinct from traditional nominees in mutual fund folios or Demat accounts. In the event of an investor’s death, DigiLocker automatically notifies the registered nominee via SMS or email. After verifying the death certificate through KYC Registration Agencies (KRAs), the nominee gains access to digital documents.

If the DigiLocker nominee and the mutual fund account nominee are the same, they can directly initiate the process. Otherwise, they can still share the documents with legal heirs or official nominees, ensuring smoother asset transfer.

• Mandates for AMCs and Depositories 

The Securities and Exchange Board of India (SEBI) has directed Asset Management Companies (AMCs), Registrars and Transfer Agents (RTAs), and Recognized Depositories to register as issuers with DigiLocker. This enables them to digitally send investor statements to DigiLocker accounts in real-time, ensuring seamless access to financial records.

How Does SEBI’s DigiLocker Benefit Investors?

The list of benefits for investors with the introduction of SEBI’s DigiLocker facility are as follows:

• Investors will be able to securely store and access their demat holdings, mutual fund statements, and consolidated account statements (CAS) through DigiLocker.
• The investors no longer struggle with emails, statements, or multiple platforms for searching the documents.
• It brings a solution to the long-standing issue of unclaimed financial assets in the Indian securities market by offering a convenient, centralized solution for systematically managing financial documents.
• Due to lack of awareness and information, most of the unclaimed assets remain untouched, however through DigiLocker nominees are informed immediately and thus can act accordingly.
• Documents stored in DigiLocker have the same legal validity as original documents under the Information Technology Act, of 2000.
•  DigiLocker streamlines the inheritance process, ensuring easier access to financial assets for nominees and legal heirs.
• Instead of visiting multiple offices, legal transmission of assets becomes faster and more accessible through DigiLocker.

How DigiLocker Mechanism Work?

The DigiLocker application will function as follows:

• Investor Registration & Nomination

Investors must register on the DigiLocker app and nominate a person for their account.

• Death Verification

 After an investor’s passing, a KYC Registration Agency (KRA) will verify the demise and inform DigiLocker.

• Nominee Notification

 DigiLocker will then notify the nominee about the investor’s death.

• Initiating Asset Transmission

 The nominee will initiate the process of transferring the deceased investor’s financial assets.

• Access to Account

The DigiLocker nominee will gain access to the investor’s DigiLocker account after their passing.

SEBI’s Advisory to Investors

In this circular, the Securities and Exchange Board of India (SEBI) has provided the following recommendations for investors:

• Use DigiLocker: Investors should start using the DigiLocker facility and link it to their investment accounts.
• Appoint a DigiLocker Nominee: Even if a nominee is already assigned in mutual fund and demat accounts, a DigiLocker nominee should also be appointed.
• Dematerialize Physical Shares: Investors should convert physical shares into demat form to fully benefit from DigiLocker.
• Keep Contact Details Updated: Ensure that the registered mobile number and email ID are always up to date to receive timely notifications.

To Wrap Up

SEBI’s integration of DigiLocker marks a significant step toward financial transparency, security, and efficiency in the Indian securities market. By enabling investors to digitally store and manage their demat holdings, mutual fund statements, and other financial documents, this initiative reduces paperwork, prevents unclaimed assets, and simplifies the inheritance process.

With features like automated nominee notifications, real-time access to financial records, and seamless document retrieval, investors can now manage their wealth more effectively while ensuring their legal heirs have hassle-free access to their assets. Additionally, SEBI’s mandate for AMCs, RTAs, and depositories to integrate with DigiLocker ensures a smooth transition to a fully digital investment ecosystem.

By adopting DigiLocker, investors can protect their financial assets, minimize disputes, and enhance their participation in India’s growing digital economy. This initiative is not just a regulatory update—it is a game-changer that will redefine how financial assets are managed, accessed, and inherited in India. To get more insights into such interesting topics and expert support in SEBI-related registrations and compliance management, visit https://enterslice.com/.

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