K V Kamath releases new spotlight papers on nominations and succession 

by Prashant Kapadia/NHN

The new spotlight papers delve further into the expectations for updated, revised, and revamped nomination facilities in terms of three policy objectives of the original white paper:

• Convenience to financial consumers and to their successors

• Due discharge for financial services providers upon providing access to and an ability to transact in the financial assets or transmission of the financial assets to the successors

• Eliminating or reducing references to an overburdened judiciary, where litigants face considerable costs and delays

Mumbai, 30, June 2022: Mr K V Kamath – the Chairman of NaBFID and former Chairman of Infosys & ICICI Bank released exclusive spotlight papers authored by Mr Pramod Rao with inputs from the Association of Registered Investment Advisors (ARIA) on

• physical shares and securities, as well as

• retirement savings solutions including the Employees’ Provident Fund as managed by EPFO & exempt trusts), Employees’ Deposit Linked Insurance, and Employees’ Pension Scheme, Employee Provident Fund as applicable to government bodies and notified institutions, Public Provident Fund, National Pension System and Annuities, and approach of provident funds in dealing with ill health, incapacitation or disability

This was a sequel to earlier spotlight papers covering mutual funds, securities held in demat accounts and current accounts, savings accounts, fixed deposits and bank lockers.

These are all a part of a white paper titled; Reimagining Nominations: Making Succession Smoother and Simpler, which deep dives into trends, opportunities, and challenges in the current succession processes was released in 2021 authored by Mr. Pramod Rao, Group General Counsel, ICICI Bank (writing in his personal capacity) with inputs from ARIA.

Nomination facilities have provided a level of succour to the successors. However, these reflect an outdated point-of-view that was more relevant when the facilities were instituted and hence require a fresh review and update as per the needs of the financial consumers and citizenry.

The level of unclaimed funds at Rs. 1.60 lakh Crores, the tedious and time-consuming legal process, and the current situation brought on by Covid-19 signal that a deeper review and recast is necessary. Variation and inconsistent treatment of nominations among these seemingly identical categories of financial assets has emerged from different laws, periods of enactment, schemes designed under such laws, clarifications, or case laws. Certain variations are quite progressive, and certain provisions downright discriminatory. All asset classes, particularly financial assets, requires review, reconciliation, and upgrading to incorporate the recommendations made in this whitepaper.

The comprehensive study provides insight and makes suggestions about all retirement savings systems  – EPF (incorporating EDLI, and EPS), Government EPFand PPF for review and necessary reforms – whether it be in the form of updating the definition of ‘family’ for making it non-discriminatory in certain cases, or dispensing with linkage to ‘family’ altogether when making nominations in others. The white paper reimagines the nomination facilities keeping the three white paper objectives paramount, and also uses the lens of ease and convenience by harnessing technological advancements which are available today.

I compliment Pramod & ARIA for adding to the already published white paper “Reimagining Nominations – making succession smoother and simpler” said Mr K V Kamath while releasing the spotlight papers. “The new spotlight papers covering Physical Shares & Securities, Employees Provident Fund & allied schemes, Government Provident Fund, Public Provident Fund & National Pension Scheme (NPS)  cover a wide gamut of financial schemes that are of critical importance to a retail investor. The importance can be understood in the context of the figure of Rs. 1.60 lakh crores investors funds lying unclaimed. I am sure the government and regulatory authorities would study these recommendations and ease processes which would benefit citizens.”

 “The paper explores the regulatory framework for each of these schemes and highlights the advantages provided by digitization in India,” said Mr. Pramod Rao. “The paper highlights the key developments of these retirement savings schemes over the last few decades and details the current state of affairs. A smoother and simpler succession process will provide quick transmission of assets. It will also relieve the courts of the unnecessary burden of contested and disputed succession matters.”

“This whitepaper is part of the #ARIATrulycares initiative which aims to support the investor community at large.. The paper also provides an overview of the policies that are currently in place to promote long-term savings and retirement income security. The study was conducted by a team of experts to understand the current condition of these schemes, and ways to improve the efficiency of all stakeholders especially to reduce the figure of unclaimed assets” said ARIA chairperson, Mr. Harsh Roongta

About ARIA: The Association of Registered Investment Advisers (ARIA) was born out of the need to support the development of the investment adviser community post the introduction of the investment adviser regulations by SEBI in 2013. ARIA was set up as a part of the inaugural RIA summit in 2017 from where an RIA Task force emerged to enable the development of the RIA profession, and bring it to the standards of other established professions that have been in existence since multiple decades. ARIA members come from different parts of the country and are a mix of individuals and corporates who are focussed on doing what is right for the investor without conflict of interest and high levels of disclosure.

About Mr. Pramod Rao: Pramod presently serves as the Group General Counsel of ICICI Bank and provides strategic oversight to the legal function for the ICICI group.. Pramod is a member of Board of Directors of ICICI Securities Ltd, ICICI Prudential Trust Ltd and ICICI Trusteeship Services Ltd and also serves as a member of the National Committee for Regulatory Affairs constituted by the Confederation of Indian Industry (CII), of the Advisory Council of Sahamati and of the SEBI Subcommittee for Regulatory Sandbox

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