SEBI has initiated multiple steps in the share market and mutual funds sectors to facilitate small-scale investors. Recently, SEBI has announced that one can invest without PAN card up to Rs. 50,000 in one mutual fund company either in one go or through SIP method of investing. Now, SEBI has ordered the companies that manages the shares should not charge any demat charges for the investment made up to Rs. 50,000.
Free Demat Account
For the small scale investors to get benefited, SEBI is going to introduce BSDA (Basic Services Demat Account). According to this there is no annual maintenance charge for the the investments up to Rs. 50,000. The annual maintenance charge of Rs. 100 will be collected for the investments made between Rs. 50,001 to Rs. 2 lakhs. Above this amount the charges will be regular and as usual. In existence, companies that maintain demat accounts or share broking trading companies are collecting Rs. 225 to Rs. 900 as demat annual maintenance cost.
According to the new scheme, the investors shares or mutual fund unit’s value will be calculated at the end of the trading on a daily basis. If this value crosses Rs. 50,000 the charge will be collected. Once if the investors crosses this maximum limit that investor will come to the payment category.
Investor or a person who has only one demat account or willing to have just one demat account can only use this facility. The important fact is that this facility will not be available for those who have more than one demat account.
SEBI has instructed the Depository Participants (D.P.) who manages the demat accounts to do necessary things for the new scheme implementation. Particularly, these instructions were sent to NSTL and CDSL companies.
Under this special scheme the account statement will be sent to you through post. In a year, maximum of 2 account statements will be sent at free of cost. If you need more that that there would be a charge of Rs. 25 or below. At the same time account statements sent via e-mail doesn’t have any charge.
This new practice will be starting from October 2012 by D.P. as per SEBI’s advice. Will this new practice be profitable to investors or the share markets?
SEBI’s this free basic demat account is an appreciative effort. Through this the small scale investors, especially investors from villages and senior citizens will be more benefited. However, one cannot say that this facilitated demat account will be beneficial to traders and short-term investors. But it will be beneficial for long-term and fund investors. Fee of Rs. 100 as demat’s annual maintenance charge up to Rs. 2 lakhs is profitable. Due to this there are chances for many mutual fund investors to transfer their fund units to their demat account.
On the other hand – it is doubtful whether the brokerage companies will show interest in encouraging the small investors who wish to start their demat account for Rs. 50,000 limit. If SEBI allows to start demat account based on the bank accounts without requiring PAN Card details there are chances for huge number of small investors to come forward and invest in share markets.