SEBI Announces No-Frills Demat Account For Small Investors

Securities and Exchange Board of India (SEBI) introduced no-frills demat accounts or Basic Services Demat Account (BSDA) for retail individual investors with no charges applicable for holdings up to Rs 50,000. That is, if the value of the holdings/securities is up to Rs 50,000, there will be no annual maintenance charges, while for holdings up to Rs 50,000 to Rs 2 lakh, the annual maintenance charges will be up to Rs 100.

SEBI asked all depositories to facilitate opening of BSDA with effect from 1st October, 2012. Investors can hold stocks, mutual funds or any other securities in such BSDA.

SEBI asked all Depository Participants (DPs) to make available limited services and reduced costs for retail individual investors, if the value of the securities held in the BSDA does not exceed Rs 2 lakh at any point of time. According to SEBI, an individual can have only one BSDA account in his/her name across all the depositories and only the sole or first holder would be eligible for BSDA.

The Depository Participants/agents of the depository would determine the value of holding on the basis of the daily closing price or NAV (Net Asset Value) of the securities or units of mutual funds. If the value of the holdings in such BSDA exceeds the prescribed amount on any date, the depository participant would levy charges.

Further, at the end of the each quarter, a transaction statement will be sent to the beneficiary owner. If there are no transactions in any quarter, the account holder would not get any transaction statements for that quarter. Further, the holder of an account with zero balance and no transactions would receive one annual statement of holding for the year.