SEBI's New Guidelines Raise Basic Demat Account Limit To Rs 10 Lakh
A basic service demat account, also known as BSDA, is a simplified form of a standard demat account.
In order to enhance the involvement of small investors in the stock market, the Securities and Exchange Board of India raised the minimum amount for the basic service demat account to Rs 10 lakh from the existing Rs 2 lakh. The updated regulations will be effective from Sept. 1, as per a circular on Friday.
Raising the cap on the value of securities held in the Basic Services Demat Account will motivate small investors to participate in the stock market and promote their financial access.
A BSDA is a simplified form of a standard demat account. The market regulator introduced this option in 2012 to alleviate the demat charges for investors holding small portfolios.
Regarding eligibility for BSDA, SEBI said an individual qualifies for a BSDA if they satisfy specific conditions. These include the requirement that the investor possesses just one demat account as the primary or initial holder, holds only one BSDA under their name across all depositories, and maintains a total value of securities in the account below Rs 10 lakh for both debt and non-debt securities collectively at all times.
Before this, an individual was allowed to 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.
For portfolio values up to Rs 4 lakh, SEBI said that the annual maintenance charge for a BDSA would be nil and for portfolio values of above Rs 4 lakh and up to Rs 10 lakh, the charges would be Rs 100.
However, if portfolio value exceeds Rs 10 lakh, then BDSA should automatically be converted into a regular demat account. With regards to services for BDSA, the regulator said that electronic statements would be provided free of cost to such account holders, besides, physical statements can be charged at Rs 25 per statement.
As per the circular, Depository Participants will open only BSDA for eligible accounts unless the account holder opts for a regular demat account via email.
DPs must review and convert existing eligible demat accounts to BSDA within two months, unless the account holder opts to keep their regular demat account via email. This review will continue at the end of each billing cycle.
Earlier this month, SEBI came out with a consultation paper on enhancing the threshold limit for BSDA.
(With inputs from PTI)
