SEBI Increases Basic Demat Account Limit by Five Times

The Securities and Exchange Board of India (SEBI) has issued a circular outlining new guidelines for the Basic Services Demat Account (BSDA), aimed at promoting financial inclusion and simplifying the investment process for individuals. These new rules, effective from September 1, 2024, build upon previous directives and are designed to further boost participation in the securities market.

Background of BSDA

The BSDA facility was first introduced by SEBI in 2012 to make holding demat accounts more accessible and affordable. This facility offers a set of defined services to eligible individuals, encouraging them to maintain demat accounts and engage in the securities market. Currently, an individual can keep debt and other securities worth up to Rs 2 lakh in a single demat account to qualify for BSDA. Starting September 1, this limit will be increased to Rs 10 lakh.

Key Changes and Decisions

Eligibility for BSDA:

• Single Demat Account: An individual can have only one demat account where they are the sole or first holder.
• Unique BSDA: An individual is allowed only one BSDA across all depositories.

Account Value Limit: The value of securities held in the Demat account should not exceed Rs 10 lakhs for both debt and non-debt securities combined at any point in time.

Opening and Conversion of Accounts:

• Automatic BSDA Opening: Depository Participants (DPs) will open a BSDA for eligible Beneficial Owners (BOs) unless the BOs specifically opt for a regular demat account via email.
• Conversion of Existing Accounts: Existing eligible demat accounts will be converted into BSDAs within two months of the circular’s effective date unless BOs opt to retain their regular demat accounts.

Charges for BSDA:

Annual Maintenance Charges (AMC):

•   Up to Rs 4 lakhs: No charges.
•   More than Rs 4 lakhs but up to INR 10 lakhs: INR 100 annually.
•   More than Rs 10 lakhs: Not eligible for BSDA, regular AMC applies.
•  Other Charges: BSDAs will have the same charges as non-BSDA accounts for other services. DPs cannot levy higher charges for BSDA services.

Services and Compliance

Services Provided:

• Electronic Statements: Provided free of cost.
• Physical Statements: May incur a fee of up to Rs 25 per statement.
• Regular Account Conditions: All other conditions applicable to regular demat accounts will also apply to BSDAs.

Implementation and Compliance:

• Amendments: Depositories must amend their bylaws, rules, and regulations to implement these changes.
• Dissemination: The provisions of the circular must be communicated to DPs and made available on the depositories’ websites.
• Compliance Systems: Depositories need to establish appropriate systems and procedures to ensure compliance.
• Reporting: Depositories must report the implementation status in the Monthly Development Report to SEBI.

Conclusion

These revised guidelines for BSDA are part of SEBI’s ongoing efforts to make investing more accessible and investor-friendly. By reducing costs and simplifying account maintenance, SEBI aims to encourage more individuals to participate in the securities market, thereby enhancing financial inclusion and market growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions