SEBI has increased the limit for the basic service demat account to Rs 10 lakhs from the current Rs 2 lakhs to encourage small investors to participate in the securities market. The new guidelines will be effective from September 1, 2024, per the SEBI’s circular.

This move is expected to support the growth of demat accounts, although the rate of increase may be gradual. The basic service demat account (BSDA) is a simplified version of a regular demat account. SEBI introduced this facility in 2012 to reduce the demat charges for investors with small portfolios and to promote their financial inclusion.

To qualify for a BSDA, an individual must meet specific criteria, such as having only one Demat account as the sole or primary holder, owning only one BSDA across all depositories, and maintaining securities valued at up to Rs 10 lakh for both debt and non-debt securities combined at any time.

SEBI also outlined the charges for BSDA based on portfolio values, stating that there will be no annual maintenance charge for portfolios valued up to Rs 4 lakh. For portfolios valued above Rs 4 lakh and up to Rs 10 lakh, the charge will be Rs 100. If the portfolio value exceeds Rs 10 lakh, the BSDA will automatically be converted into a regular demat account.

Additionally, the circular states that account holders will receive electronic statements free of charge, while physical statements will be charged Rs 25 per statement. Depository participants (DPs) must open a Basic Services Demat Account (BSDA) for eligible accounts unless the account holder opts for a standard demat account via email.

Eligible existing demat accounts will be assessed and changed to BSDA within two months unless the account holder opts to keep their standard demat account via email. This assessment will occur after each billing cycle.