The Securities and Exchange Board of India (SEBI) has announced significant changes to the Basic Services Demat Account (BSDA) facility, set to take effect from September 1, 2024. These modifications aim to promote wider financial inclusion and simplify the process of investing in the securities market. Under the new guidelines, individuals are eligible for a BSDA if they have or propose to have only one demat account where they are the sole or first holder, and the total value of securities held does not exceed 10 Lakhs for debt and other securities combined.

 

In a move to expand BSDA adoption, Depository Participants (DPs) are now required to open BSDAs by default for eligible Beneficial Owners (BOs), unless the BO specifically requests a regular demat account via email. Furthermore, DPs must reassess the eligibility of all existing accounts within two months of the circular's implementation and convert eligible accounts to BSDAs, subject to the account holder's consent.

 

The circular also introduces a revised charge structure for BSDAs. Accounts with holdings valued up to Rs4 lakhs will incur no Annual Maintenance Charge (AMC), while those with holdings between Rs4 lakhs and Rs10 lakhs will be charged a maximum of Rs100 AMC. Accounts exceeding the Rs10 lakh threshold will no longer be classified as BSDAs and will be subject to regular AMC rates. It's worth noting that BSDAs will be treated on par with regular accounts for other service charges.

 

In terms of services, BSDA holders will receive electronic statements free of cost, with physical statements available for a nominal fee not exceeding 25 per statement. The value of holdings in BSDAs will be determined based on daily closing prices or NAV of securities, with special provisions for unlisted and suspended securities.

 

To ensure smooth implementation, SEBI has directed depositories to amend relevant bye-laws and regulations, disseminate information to DPs and on their websites, and establish appropriate systems and procedures. Depositories are also required to report on the implementation status through Monthly Development Reports.

 

This comprehensive update to the BSDA facility underscores SEBI's commitment to enhancing financial inclusion and simplifying investment processes in the Indian securities market. By lowering barriers to entry and reducing maintenance costs for small investors, these changes are expected to encourage wider participation in the financial markets.