On Jun. 5, IND SEBI drafted circular re basic services demat account.
IND SEBI drafted circular re basic services demat account (BSDA) facility to promote financial inclusion and ease of investing by reducing the cost of maintaining securities.
Overview of Proposal
Current eligibility limits for holding securities in a BSDA are up to INR 2 lakhs each for debt, non-debt securities; draft proposes to increase combined limit to INR 10 lakhs.
Feedback is requested on revising annual maintenance charges to NIL, INR 100/500.
Individual is eligible for a BSDA if they are sole or primary holder of only one demat account across all depositories, value of securities does not exceed prescribed limit.
Depository participants (DPs) are instructed to open BSDAs for eligible beneficial owners (BOs), unless specified; DPs are required to reassess and convert existing eligible accounts to BSDAs, continue this verification at the end of each billing cycle.
No charges for holdings up to IND 4 lakhs; INR 100 for holdings more than INR 4 lakhs up to INR 10 lakhs; holdings exceeding INR 10 lakhs revert to regular account charge.
The depositories must amend relevant rules and regulations as necessary, ensure dissemination of the new provisions, and establish systems for compliance.
Effectiveness
The consultation is open to Jun. 26, 2024.
Jun. 28, 2024 Circular Finalized
On Jun. 28, 2024, IND SEBI issued circular on Facility for BSDA for financial inclusion and ease of investing, which shall come into effect from Sep. 1, 2024.
Depository participants shall reassess the eligibility of all the existing BOs with respect to BSDA within two months from the date of this circular coming into effect.
Depositories shall make amendments to relevant bye-laws, rules and regulations for the implementation of this decision immediately, as may be applicable/necessary.
Notify their depository participants and put in place appropriate systems/procedures to ensure compliance of provisions of this circular; submit monthly development report.
Aug. 2024 IND CDSL Implementation
On Aug. 26, 2024, IND CDSL issued operational modalities for implementation of BSDA; from Sep. 1, 2024, new demat accounts must be opened with BSDA flag set to Y.
Non-closed demat accounts with same PAN as the first holder will be marked as non-BSDA.
Account holders wishing not to avail BSDA services must explicitly opt out by sending email from registered email address; following this, DP can change the status to O.
Existing accounts must be reassessed for BSDA eligibility using criteria as per the Jun. 2024 SEBI circular; eligible accounts must be converted to BSDA by Oct. 31, 2024.
CDSL will provide monthly lists of account holders with multiple demat accounts under the same PAN for DPs; DPs have access to daily BSDA valuation, compliance reports.
DPs with higher charges for BSDA accounts must adjust their tariff structures.
All changes to BSDA status or account modifications must be documented for audit purposes; communication with account holders about these changes must be logged.
Sep. 2024 IND CDSL Eligibility Criteria
On Sep. 10, 2024, IND CDSL issued communique re eligibility criteria of BSDA.
Demat accounts must be under the individual category; value of securities in demat account must not exceed INR 10 lakhs for debt and non-debt securities combined.
Account holder must have only one demat account across depositories, where product account number (PAN) of first holder is verified; this condition does not apply to PAN-exempt BO IDs; and IND CDSL shared lists of eligible account holders with DPs.
Set out actions to be taken, like unmarking duplicates, and notifying account holders.
Sep. 14, 2024 IND CDSL List of BO Accounts
On Sep. 14, 2024, IND CDSL informed DP about the availability of a file containing details of all non-closed BO accounts; such as PAN and BSDA eligibility status.
DPs must reassess existing accounts, convert eligible ones to BSDA by Oct. 31, 2024.
If a BO opts out of BSDA, confirmation via email is required; DPs are required to repeat conversion process at end of every billing cycle, comply with SEBI regulations.
Regulators
IND CDSL; IND SEBI
Entity Types
B/D; Depo
Reference
Com CDSL/OPS/DP/POLCY/2024/531, 9/14/2024; Com CDSL/OPS/DP/POLCY/2024/522, 9/10/2024; Cir CDSL/OPS/DP/POLCY/2024/483, 8/26/2024; Cir SEBI/HO/MIRSD/POD-1/P/CIR/2024/91, 6/28/2024; CP 6/5/2024
