SEBI proposes increasing the value limit of securities in basic demat accounts to Rs.10 lakh

The Securities and Exchange Board of India (SEBI) has put forward a proposal to raise the threshold for Basic Service Demat Accounts (BSDA) from the current Rs.2 lakh to Rs.10 lakh. This move is focused on increasing retail investor participation in the securities market. Introduced in 2012, the BSDA was designed to ease the burden of demat charges on investors with smaller portfolios.

Current BSDA Regulations

Currently, an individual must maintain a demat account holding up to Rs.2 lakh in debt securities and Rs.2 lakh in other securities to qualify for a BSDA. This initiative was initially introduced to support small investors by reducing their maintenance costs.

Proposed Changes to BSDA

In the recent consultation paper, SEBI suggested a comprehensive review of the BSDA facility. The proposed changes include:

Increased Threshold: The total value of securities held in a BSDA should not exceed Rs.10 lakh, inclusive of both debt and non-debt securities.

Eligibility Criteria: To qualify, an individual must have only one demat account as the sole or first holder and must not hold another BSDA across all depositories.

Annual Maintenance Charges (AMC): 

• For portfolio values up to Rs.4 lakh, no annual maintenance charge will be levied.
• For portfolio values between Rs.4 lakh and Rs.10 lakh, an annual maintenance charge of Rs.100 will apply.
• Accounts exceeding a portfolio value of Rs.10 lakh will automatically be converted to regular demat accounts.

Services for BSDA Holders

SEBI has also proposed that electronic statements should be provided free of charge to BSDA holders. If physical statements are requested, a charge of Rs.25 per statement will be applicable.

Public Consultation

SEBI has invited public comments on the proposed changes until June 26, aiming to gather feedback and ensure that the final regulations are well-suited to boost retail investor participation and facilitate ease of investments.

Conclusion: In conclusion, by enhancing the BSDA threshold and revising the associated charges and services, SEBI hopes to make the securities market more accessible and attractive to retail investors, ultimately encouraging a broader base of participation and inclusion.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.