Basic service Demat account holder? You will have to pay these annual maintenance charges from June 1
Basic Services Demat Account Annual Maintenance Charges (AMC): In what may boost participation of retail investors in the debt market, the SEBI is set to revise the annual maintenance charges levied on debt securities held through basic services Demat accounts from June 1.
Basic Services Demat Account Annual Maintenance Charges (AMC): In what may boost participation of retail investors in the debt market, the SEBI is set to revise the annual maintenance charges levied on debt securities held through basic services Demat accounts from June 1. The Basic Services Demat Account (BSDA) offers limited services at a lower cost for retail investors. In a circular released this week, SEBI said, "In order to further boost participation in Debt Market and based on representation received from market participants, in partial modification of the abovementioned SEBI circulars, it has been decided to revise the structure of charges for debt securities as defined in SEBI (Issue and Listing of Debt Securities) Regulations, 2008." Debt securities include government bond, corporate bond, certificate of deposit (CD) etc.
The proposed revisions in the SEBI circular include:
1. SEBI said, "No AMC shall be levied in case the value of holdings of debt securities is up to Rs. 1 lakh and a maximum AMC of Rs. 100 shall be levied if the value of holdings of debt securities is between Rs. 1,00,001 and Rs.2,00,000."
2. "No AMC shall be levied in case the value of holdings other than debt securities is below Rs. 50,000 and a maximum AMC of Rs. 100 shall be levied if the value of holdings other than debt securities is between Rs.50,001 and Rs.2,00,000."
The Basic Services Demat account was introduced by SEBI in 2012 with limited services for eligible individuals. The objective of BSDA was to provide wider financial inclusion and encourage the holding of Demat accounts.
SEBI has now advised depositories to make amendments to relevant rules for the implementation of the latest decision from June 1. They also need to communicate the status of the implementation of the proposed changes to the regulator.
What is BSDA
BSDA is a Demat account for small investors who don't, or can't, invest regularly in stocks, bonds, ETFs, etc. One of the conditions for having a BDSA is that it should be the only Demat account of the investor. The AMC on BDSA is on a slab basis. Currently, there is no charge for AMC if the value of the holding is up to Rs 50,000. However, for Rs 50,000-Rs 2,00,000 value of holding, the AMC is Rs 100. The brokerage and the taxes on BDSA are the same as other regular accounts. This is set to change from June 1.
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As per SEBI, BSDA can be held by, "All the individuals who have or propose to have only one demat account where they are the sole or first holder shall be eligible to have a BSDA provided that the value of securities held in the demat account does not exceed Rupees Two Lakhs at any point of time. An individual can have only one BSDA in his/her name across all depositories."