SEBI increases basic demat account limit to ₹10 lakh to boost investors' participation

To boost participation of small investors in the securities market, SEBI on Friday increased the threshold for the basic service demat account to ₹10 lakh from the current ₹2 lakh.

The new guidelines will come into force from September 1, the Securities and Exchange Board of India (SEBI) said in a circular.

Increasing the limit of securities' value held in the Basic Services Demat Account (BSDA) will encourage small investors to trade in the stock market and ensure their financial inclusion.

A basic service demat account, or BSDA, is a more basic version of a regular demat account. The facility was introduced by markets regulator SEBI in 2012 to reduce the burden of demat charges on investors with small portfolios.

On eligibility for BSDA, SEBI said an individual is eligible for a BSDA if he/she meets certain criteria such as the investor has only one demat account as the sole or first holder, has only one BSDA in his name across all depositories and the value of securities in the account does not exceed ₹10 lakh for both debt and non-debt securities combined at any time.

Before this, an individual was allowed to hold debt securities worth up to ₹2 lakh and other than debt securities worth up to ₹2 lakh in a single demat account to be eligible for BSDA.

For portfolio values up to ₹4 lakh, SEBI said that the annual maintenance charge for a BDSA would be nil and for portfolio values of above ₹4 lakh and up to ₹10 lakh, the charges would be ₹100.

However, if portfolio value exceeds ₹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 ₹25 per statement.

As per the circular, Depository Participants (DPs) 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.