RAS question
SEBI introduced the concept of 'Basic Service Demat Account' (BSDA) to:
Correct answer: (D) Provide zero or low-cost demat services to small investors.
SEBI introduced the Basic Service Demat Account to give small retail investors zero-cost or low-cost demat account maintenance for holding securities.
Explanation
SEBI introduced the Basic Service Demat Account after receiving concerns about the cost of demat accounts, especially from small individual investors. The official SEBI release says the facility was meant to promote wider financial inclusion, encourage the holding of demat accounts, and reduce the cost of maintaining securities in demat accounts for retail individual investors. Therefore, BSDA is not a trading product or a separate market segment; it is a limited-service demat account with reduced charges. BSDA holders with securities value up to Rs 4 lakh, raised from Rs 2 lakh in 2023, pay no annual maintenance charges.
Why the other options are wrong
- (A) Algorithmic trading concerns automated order placement and market execution systems, while BSDA is about reducing demat account maintenance costs for small investors.
- (B) A separate market for penny stocks would be a trading-market design issue, whereas BSDA is a low-cost demat account facility for retail individual investors.
- (C) Foreign institutional investor access to Indian markets is not the object of BSDA, which SEBI framed around small individual investors and demat account costs.
Concept
Capital-market inclusion and investor-protection measures fall under Indian Economy. RAS often asks such SEBI initiatives because they connect financial inclusion with everyday securities-market regulation.