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In this edition, we will be seeing about “Basic Services Demat Account” (BSDA) and it’s latest amendments. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

Saranya Deivasigamani,
CEO

BSDA

Since holding of demat account is beneficial to individual investors, SEBI initiated extensive consultations with all the stakeholders to address the concerns and suggestions with respect to cost of demat accounts especially from small individual investors.

The SEBI Board had taken decisions to extend the reach of IPOs for the benefit of retail investors. With a view to achieve wider financial inclusion, encourage holding of demat accounts and to reduce the cost of maintaining securities in demat accounts for retail individual investors, it has been decided that all depository participants (DPs) shall make available a “Basic Services Demat Account” (BSDA) with limited services and reduced costs. The details are provided in the circular dated August 27, 2012. In this edition, we will be seeing all about BSDA and it’s latest amendments.

The salient features of the BSDA are as follows:

a. Eligibility Criteria:

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.

b. Charges:

The Annual Maintenance Charges (AMC) structure for BSDA shall be on a slab basis; if the value of holding is
(i) upto INR. 50,000 there will be NIL AMC and

(ii) for value of holding from INR. 50,001 to INR. 200,000 AMC will be upto INR. 100

The value of holding shall be determined by the DPs 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 DPs may levy charges as applicable to regular accounts (non-BSDA) from that date onwards.

c. Transaction Statements:

Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.

d. Holding Statement:

One annual physical statement of holding shall be sent to the stated address of the BO in respect of accounts with no transaction and nil balance and for remaining accounts one annual statement of holding shall be sent in electronic or physical form as opted for by the BO.

e. Charges for statements:

Electronic statements shall be provided free of cost. In case of physical statements, the DP shall provide at least two statements free of cost during the billing cycle. Additional physical statement may be charged at a fee not exceeding INR.25/- per statement.

Rationalisation of services with respect to regular accounts: In order to reduce the cost of compliance of DPs, following rationalisation measures were decided for regular accounts:

a. Accounts with zero balance and nil transactions during the year: The DPs shall send one physical statement of holding annually to such BOs and shall resume sending the transaction statement as and when there is a transaction in the account.

b. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO.

c. Accounts with credit balance: For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent to the BO.

Latest Amendments

SEBI vide circulars CIR/MRD/DP/22/2012 dated August 27, 2012 and CIR/MRD/DP/20/2015 dated December 11, 2015, introduced the facility of “Basic Services Demat Account” (BSDA) with limited services for eligible individuals with the objective of achieving wider financial inclusion and to encourage holding of demat accounts.
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, as given below:
No AMC shall be levied in case the value of holdings of debt securities is up to INR. 1 lakh and a maximum AMC of INR. 100 shall be levied if the value of holdings of debt securities is between INR. 1,00,001 and INR.2,00,000. And
No AMC shall be levied in case the value of holdings other than debt securities is below INR. 50,000 and a maximum AMC of INR. 100 shall be levied if the value of holdings other than debt securities is between INR.50,001 and INR.2,00,000.
This circular shall come into effect from June 01, 2019.
The Depositories are advised to:-
make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision as may be applicable / necessary; and
communicate to SEBI, the status of implementation of the provisions of this circular by the DPs in the Monthly Development Report.
This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Legal Term

Vindicated

Show or prove to be right, reasonable, or justified.

MCA Updates

New version of form for incorporation—eForm INC-35 -AGILE
Extension of fees and last date for CRA-2, DIR-3-KYC.
Applicability of AS116, AS101

SEBI Updates

SEBI (Payment of Fees)(Amendment) Regulations, 2019. – Dated March 22, 2019.
Guidelines for BCP and DR of MIIs.
Empanelment of Insolvency Professionals (IPs) to be appointed as Administrator, remuneration and other incidental matters.
BSDA limit for securities.

RBI Updates

Revision on Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities.

IT Updates

Income-tax (Second Amendment) Rules, 2019.

GST Updates

Advisory to GST Taxpayers on Invoice Series to be used wef 1st April, 2019