According to a circular from the Securities and Exchange Board of India (Sebi), the new rules will take effect on September 1.
Sebi raised the minimum amount required for a basic service demat account on Friday from Rs 2 lakh to Rs 10 lakh in an effort to encourage small investors to participate in the securities market.
According to a circular from the Securities and Exchange Board of India (Sebi), the new rules will take effect on September 1.
Small investors will be encouraged to participate in the stock market and their financial inclusion will be ensured by raising the cap on the value of assets kept in the Basic Services Demat Account (BSDA).
A more simple kind of a standard demat account is called a basic service demat account, or BSDA. Markets regulator Sebi launched the facility in 2012 to help investors with modest portfolios bear the cost of demat fees.
According to Sebi, a person is qualified for a BSDA if they satisfy specific requirements. These include having a single demat account as the primary holder, having a single BSDA in their name across all depositories, and having securities in their account valued at no more than Rs 10 lakh total at any given time, both for debt and non-debt securities.
Before before, a person might be eligible for BSDA if they held debt securities worth up to Rs. 2 lakh and non-debt assets worth up to Rs. 2 lakh in a single demat account.
The yearly maintenance price for a BDSA would be Rs 100 for portfolio values up to Rs 10 lakh and Rs zero for portfolio values up to Rs 4 lakh, according to Sebi.
But once the value of the portfolio surpasses Rs. 10 lakh, the BDSA ought to automatically change into a conventional demat account.
In relation to BDSA services, the regulatory body said that electronic statements would be sent to account holders at no cost, but hardcopy statements would incur a fee of Rs 25 each statement.
Unless the account user requests a standard demat account via email, Depository Participants (DPs) will only create BSDA for qualified accounts, according the circular.
If an eligible demat account already exists, DPs are required to examine it and convert it to BSDA within two months, unless the account user chooses to maintain their conventional demat account via email. Every billing cycle will conclude with a continuation of this evaluation.
Sebi released a consultation document on raising the BSDA threshold limit earlier this month.
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