The Securities and Exchange Board of India (SEBI) wants to show her solidarity with retail investors. In this effort, it endeavors to regulate a market which doesn’t require any regulation. Basic Service Demat Account (BSDA) is one such move.
It sounds so populist to offer demat account to the small investors as freebies. But the regulator has failed to understand that most of the depository participants are offering demat account without any fees or annual maintenance charge. The broking giant Zerodha has announced not to charge anything from demat account holders at any stage of their investment journey. One must be perplexed at the requirement of such circular (which will come into effect from 1st September 2024).
The provision of BDSA is prone to be mutualized the way Jan Dhan Accounts were used by unscrupulous elements for money laundering and benami transactions. It’s well known that demat accounts are available on rent for IPO purposes and BDSA may easily be utilized for this purpose. The mighty investors may get numerous accounts opened for just a cup of tea and use the same to grab their share in IPO allotment. The manpower companies which employ thousands of workers for construction sites and other activities will get benefit out of such move. The BDSA account is prone to use for money laundering as well. Has SEBI the technological framework to detect misuse of BDSA account.
Apart from the limit prescribed for the basic service demat account, the wordings and syntax of the aforesaid circular is tempting enough to lure demat account tenants.
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