Sebi proposes no-frills demat account for small investors

NEW DELHI: With an aim to encourage an investment culture in the country, market regulatorSebi today announced no-frills or basic trading accounts for retail individual investors with no charges applicable for holdings up to Rs 50,000.

The investors can hold securities worth up to Rs two lakh in these no-frills accounts, to be called Basic Services
Demat Account (BSDA), but the charges would be capped at a maximum of Rs 100 a year for funds exceeding Rs 50,000.

There will be no Annual Maintenance Charges if the value of holding in these accounts is up to Rs 50,000, Sebi said in a circular.

The move follows a facility of no-frills savings account already in place at various banks as per directions of the banking sector regulator RBI (
Reserve Bank of India).

Investors can hold stocks,
mutual funds and other securities in these accounts and Sebi has asked the depositories to facilitate opening of such accounts with effect from October 1, 2012.

Sebi said that investors would get electronic statements free of cost for these accounts. Besides, at least two physical statements would also be provided free of cost during the billing cycle and any additional physical statement may be charged at a fee not exceeding Rs 25 per statement.

The investors would be able to get SMS alert facility for all debit transactions on these accounts through their mobile phones.

All individuals, who propose to have only one demat account and those who have accounts where the person is not the first holder, would be eligible for BSDA.

"The value of holding shall be determined by the Depository Participants (DPs) on the basis of the daily closing price or Net Asset Value (NAV) of the securities or units of mutual funds, as the case may be," the circular said.

Meanwhile, Sebi has also rationalised the services provided in the case of regular demat accounts.

According to the market regulator, the holders of accounts with zero balance and nil transactions would receive only one physical statement of holding annually. Once they resume transactions, they would start receiving the statements.

Further, for accounts which become zero balance, no transaction statement would be sent for the duration when the balance remains nil.

"For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent," the circular said.