Sebi plans raising demat account threshold to Rs 10 L

The regulator is also reviewing the account maintenance charges (AMC) for BSDA and the services that will be provided through it.
Sebi plans raising demat account threshold to Rs 10 L

MUMBAI: Sebi is planning to raise the limit of the value of securities held in basic service demat account (BSDA) by five times to R 10 lakh. Currently, an individual can hold debt securities worth up to R 2 lakh and other than debt securities worth up to R2 lakh in a single demat account

The Securities and Exchange Board had introduced the BSDA facilities in 2012 to promote financial inclusion. In a consultation paper issued on Wednesday, the regulator has proposed to increase these limits to R10 lakh. The Sebi has also asked if the R10-lakh limit should be across debt and other-than-debt securities or if separate limits should be retained for the two categories.

“Keeping in view the growth of benchmark indices in the previous decade and to further enhance 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 categorised as BSDA,” the paper said. The regulator is also reviewing the account maintenance charges (AMC) for BSDA and the services that will be provided through it.

Currently, there is no AMC for accounts that hold up to R1 lakh in debt securities and R50,000 in other-than-debt securities. This limit has been proposed to be revised to R4 lakh. AMC for accounts holding between R4 lakh and R10 lakh worth of securities has been proposed as R100. Accounts holding more than R10 lakh have been proposed to be considered as a regular account, and therefore be charged the regular AMC.

The changes are to further drive financial inclusion and also to further improve the ease of investing, Sebi said. “The proposed changes are aimed at achieving wider financial inclusion, encourage holding of demat accounts and to reduce the cost of maintaining securities in demat accounts for retail individual investors,” the paper said.

Sebi has sought public comments on the following key proposals in the draft paper: a) whether the BSDA limit should be enhanced over and above the proposed limit of R10 lakh and if yes, why; and b) whether, instead of a combined limit which shall be fungible across debt and other than debt

securities as proposed, separate limits should be retained for debt securities and other than debt securities?; also, whether the annual maintenance charges for BSDA should be reviewed further and if yes by how much?

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