In a progressive move aimed at promoting financial inclusion and simplifying investment processes, the Securities and Exchange Board of India (SEBI), vide its Circular dated June 28,2024, has revamped the Basic Services Demat Account (BSDA) framework. Effective from September 1st, 2024, the revised BSDA framework, detailed under SEBI Circular no. CIR/MRD/DP/22/2012,and subsequent updates, seeks to facilitate easier access to demat accounts for eligible individuals., This initiative underscores SEBI's commitment to broadening participation in the securities market while ensuring robust investor protection and market integrity.
Eligibility Criteria for BSDA are:-
1. Eligible individuals must have or intend to have only one demat account where they are the sole or first holder;
2. Each individual can hold only one BSDA across all depositories;
3. The total value of securities held in the demat account, comprising both debt and other securities, must not exceed Rs. 10 lakhs at any point in time.
Opening and Conversion Process
1. Depository Participants (DPs) must open BSDAs for eligible Beneficial Owners (BOs), unless the BOs explicitly opt for a regular demat account via email consent.
2. DPs are required to reassess the eligibility of all existing BOs within two months from the circular's effective date. Eligible demat accounts will be automatically converted into BSDAs, unless BOs provide consent for a regular account.
Fee Structure and Charges
1. Annual Maintenance Charges (AMC):
· Up to Rs. 4 lakhs: Nil
· Above Rs. 4 lakhs up to Rs. 10 lakhs: Rs. 100
· Exceeding Rs. 10 lakhs: Regular AMC applicable
Besides AMC, BSDA will incur charges equivalent to regular demat accounts, ensuring parity without additional fees.
2. Valuation Criteria:
DPs will assess BSDA holdings based on daily closing prices or NAVs for securities and mutual funds; unlisted securities use face value unless traded prices are unavailable. Suspended securities won't count towards BSDA eligibility.
The Key Services Offered under the BSDA framework includes:-
1. BSDA holders will receive electronic statements at no cost.
2. A fee not exceeding Rs. 25 per statement may be charged for physical statements.
3. All standard conditions applicable to regular demat accounts will apply, except where specifically altered for BSDAs.
Implementation and Compliance
Effective from September 1, 2024, this circular supplants previous guidelines. Depositories are instructed to Depositories are instructed to promptly amend relevant bye-laws, rules, and regulations, notify their DPs and disseminate circular provisions on their websites, establish compliant systems and procedures, and report implementation status to SEBI through the Monthly Development Report.
Conclusion
SEBI's revised BSDA framework represents a significant stride towards inclusivity in India's securities market. By reducing barriers to entry and simplifying account management, the initiative aims to empower a wider demographic of investors. This proactive measure is poised to foster greater investor confidence and stimulate broader market participation, aligning with SEBI's mandate to safeguard investor interests and promote market development. As the framework takes effect from September 1, 2024, it is poised to catalyze a more inclusive and dynamic investment landscape, reinforcing SEBI's role in driving sustainable market development.
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