Sebi increases minimum demat account limit to ₹10 lakh in order to encourage more involvement

To encourage more involvement from small investors in the securities market, Sebi has raised the minimum amount for the basic service demat account to ₹10 lakh, up from the previous ₹2 lakh.

The Securities and Exchange Board of India (Sebi) announced in a circular that the fresh regulations will be effective starting 1st September. 

Raising the cap on the value of securities in the Basic Services Demat Account (BSDA) will motivate small investors to participate in the stock market and promote their financial inclusion. A BSDA is a simplified type of demat account compared to a standard one. The service was launched by the securities regulator Sebi in 2012 to lessen the impact of demat fees on investors with limited portfolios.

According to Sebi, a person can have a Basic Services Demat Account (BSDA) if they fulfill specific requirements like having just one demat account as the primary or first holder, holding only one BSDA in their name in all depositories, and maintaining a total value of securities under ₹10 lakh for both debt and non-debt securities in the account at all times.

Before this, a person could possess debt securities totaling ₹2 lakh and other securities totaling ₹2 lakh in a single demat account to qualify for BSDA. Sebi stated that there will be no annual maintenance charge for BDSA portfolios worth up to ₹4 lakh but for portfolios worth above ₹4 lakh and up to ₹10 lakh, a charge of ₹100 would apply.

If the value of the portfolio goes over ₹10 lakh, BDSA must be converted to a standard demat account.

The regulator announced that BDSA account holders will receive complimentary electronic statements, while a fee of ₹25 will be charged for physical statements.

According to the circular, DPs will open only BSDA for eligible accounts unless the account holder chooses a regular demat account through email. DPs are required to examine and switch qualified demat accounts to BSDA within two months unless the account owner chooses to retain their standard demat account through email. This review will be ongoing after every billing period.