The Securities and Exchange Board of India (SEBI) has proposed to increase the threshold for the basic service demat account (BSDA) on Wednesday (5 June, 2024) to Rs 10 lakh from the current Rs 2 lakh. This move aims to encourage more retail investors to participate in the securities market.
Introduced by Sebi in 2012, BSDA is a simplified version of a regular demat account, designed to ease the burden of demat charges on investors with smaller portfolios.
To encourage more people to invest in the securities market and simplify investment processes, the regular said in a consultation paper, “Keeping in view the growth of benchmark indices in the previous decade and to further enhance the participation of retail investors in the securities market including participation of investors holding securities in physical form, the facility for BSDA has been reviewed and it is proposed to enhance the limit for a demat account to be categorized as BSDA.”
Eligibility for BSDA
To qualify for BSDA, an individual must meet the following criteria:
a) They have or plan to have only one demat account where they are the sole or first holder.
b) They possess only one BSDA across all depositories.
c) The value of securities in the demat account should not surpass Rs 10 lakh, including both debt and other securities, at any given time.
According to the consultation paper, individuals are also eligible for BSDA if they hold debt securities up to Rs. 2 lakhs and other securities up to Rs. 2 lakhs in a single demat account.
It further says that the regulator is reviewing the account maintenance charges (AMC) for BSDA and the services it offers.
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Currently, accounts holding up to Rs. 1 lakh in debt securities and Rs. 50,000 in other securities have no AMC. This limit is offered to be extended to Rs. 4 lakh.
For accounts holding securities valued between Rs. 4 lakh and Rs. 10 lakh, a proposed AMC of Rs. 100 is under consideration.
However, if the portfolio value surpasses Rs 10 lakh, the BSDA should automatically convert into a regular demat account.
The consultation paper is open for comments/suggestions till June 26, 2024.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
