Mumbai, Aug. 27: Investors can avail themselves of a demat account that will have no maintenance cost till the value of holding in the account touches Rs 50,000.

The Securities and Exchange Board of India (Sebi) today launched the no-frills demat account encouraging small investors to put their money in equity.

At present, firms offering demat facilities charge between Rs 200 and Rs 1,000 annually as a maintenance fee.

The market regulator said no annual maintenance cost would be charged if the value of the individual holding is up to Rs 50,000. For value of holding between Rs 50,001 and Rs 2 lakh, the maintenance charge will be up to Rs 100.

Sebi said it had received several suggestions on demat costs particularly from small individual investors.

With a view to achieving a wider financial inclusion, it directed all depository participants (DPs) to make available a Basic Services Demat Account (BSDA), or a no-frills account, with limited services and reduced costs. An individual can have only one no-frills account in his or her name across all depositories.

The value of the holding will 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 exceeds Rs 2 lakh at any date, the DPs may levy charges as applicable to regular accounts from that date onwards.

Sebi also allowed promoter entities to hit the market with successive institutional placement programme and offer for sale schemes with a two-week gap to help them dilute stake to meet the minimum 25 per cent public holding norms.