In a move to encourage more retail investors to participate in the stock market, the Securities and Exchange Board of India (SEBI) has significantly increased the investment limit for Basic Service Demat Accounts (BSDAs).
Increased BSDA Limit
Previously, BSDAs had a limit of Rs. 2 lakh on the total value of securities held in the account. SEBI has now raised this limit to Rs. 10 lakh, making it a more attractive option for a wider range of investors. This decision comes after considering feedback from market participants [SEBI raises ‘Basic Services Demat Account’ limit from Rs 2 lakh to Rs 10 lakh,
BSDAs are a low-cost alternative to regular demat accounts. They are designed specifically for retail investors who are new to the stock market or who prefer a simpler and more affordable option. Introduced in 2012 to promote financial inclusion, BSDAs typically have lower account opening fees and annual maintenance charges compared to regular demat accounts Facility for Basic Services Demat Account (BSDA) for Financial Inclusion and Ease of Investing,
Revised Fee Structure
The revised fee structure for BSDAs is as follows:
- No maintenance charges for accounts holding securities with a total value exceeding Rs. 4 lakh.
- Rs. 100 annual maintenance charge for accounts holding securities with a value between Rs. 4 lakh and Rs. 10 lakh.
- Accounts exceeding Rs. 10 lakh will no longer be considered BSDAs and will be subject to regular demat account charges.
NRIs Can Now Invest More Easily
In a separate move, SEBI has also relaxed the rules for Non-Resident Indians (NRIs) investing in India. Foreign Portfolio Investors (FPIs) based in International Financial Services Centres (IFSCs) can now invest up to 100% of their corpus from NRIs, Overseas Citizens of India (OCIs), and resident Indians. This is expected to attract more foreign investment into the Indian stock market Nod for NRI participation of 100% in IFSC-based FPIs, [Financial Express [invalid URL removed]].
Overall Impact
These changes by SEBI are expected to make the Indian stock market more accessible and attractive to a wider range of investors, both domestic and foreign. By increasing the BSDA limit and reducing costs for smaller investors, SEBI is aiming to encourage more retail participation in the market. Additionally, the relaxed rules for NRI investment through IFSC-based FPIs have the potential to bring in significant foreign capital.
