Small individual investors will be able to get no-frills demat accounts for trading in stocks, mutual funds and other securities from Monday without any annual maintenance charges for holdings up to Rs. 50,000.
Also, the charges would be capped at a maximum of Rs. 100 a year if the value of their portfolio is up to Rs. 200,000.
The move is part of market regulator Securities and Exchange Board of India’s (SEBI) efforts to encourage an investment culture in the country and reach out to a larger number of small investors.
As per a SEBI circular, from October 1, depository participants, which manage the investors’ demat accounts, have been asked to provide the small individual investors with an option to get a ‘Basic Service Demat Account (BSDA)’ with limited services and nil or small charges. SEBI expects to achieve wider financial inclusion, encourage holding of demat accounts and reduce the cost of maintaining securities in demat accounts for retail individual investors with this move.
If the value of holding in such accounts exceed Rs. 200,000 limit, the applicable charges would apply, while the investors holding normal accounts would also be given an option to convert to no-frills account if the value of their holdings dips below this threshold limit.
The value of holding will be determined on the basis of the daily closing price or NAV of the securities or units of mutual funds. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the charges applicable to regular accounts can be levied from that date onwards.