The Securities and Exchange Board of India proposed increasing the threshold for the basic service demat account to Rs 10 lakh from the existing Rs 2 lakh on Wednesday, with the aim of encouraging greater retail investor participation in the securities market.
BSDA is a simplified version of a standard demat account. The markets regulator introduced this facility in 2012 to alleviate the cost of demat charges for investors with smaller portfolios.
At present, an individual can hold debt securities worth up to Rs 2 lakh and other than debt securities worth up to Rs 2 lakh in a single demat account to be eligible for BSDA.
In order to further boost participation in the securities market and to facilitate ease of doing investments, the facility of BSDA has been comprehensively reviewed, SEBI said in its consultation paper.
The regulator proposed that the value of securities held in the demat account should not exceed Rs 10 lakh for debt and other than debt securities combined at any point of time.
An individual needs to have only one demat account where he/she is the sole or first holder and needs to have only one BSDA in his/her name across all depositories, SEBI said.
Additionally, the regulator has proposed to review the maximum annual maintenance charges for BSDA.
For portfolio values up to Rs 4 lakh, SEBI has proposed that annual maintenance charge for a BSDA should be nil and for portfolio values of between over Rs 4 lakh and up to Rs 10 lakh, the charges should be Rs 100.
However, if portfolio value exceeds Rs 10 lakh then BSDA should automatically be converted into a regular demat account.
With regards to services for BSDA, the regulator said that electronic statements should be provided free of cost to such account holders. Besides, physical statements can be charged at Rs 25 per statement.
SEBI has sought comments till June 26 on the proposal.
(With Inputs From PTI)
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