Small investors who wish to subscribe the proposed Rajiv Gandhi Equity Savings Scheme (RGESS) are likely to have the incentive of setting up cheaper demat accounts.
At present,investors have to pay nearly Rs 1,000 annually as account charges for dematerialised (demat) accounts that are mandatory for trading in stocks.
We are exploring the option of no frills demat accounts so that small investors dont shy away from the scheme due to the heavy annual charges, a finance ministry official said. The finance ministry has floated the idea to market regulator Sebi,which will finalise plan,the official said.
Finance minister Pranab Mukherjee as part of the Union Budget for 2012-13 had announced the Rajiv Gandhi Equity Savings Scheme as a means to encourage flow of savings in financial instruments and improve the depth of domestic capital market.
Under the scheme,first time retail investors who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh will enjoy income tax deduction of 50 per cent. A once in a lifetime scheme,it will also have a lock-in period of 3 years.
Finance secretary RS Gujral had recently said that the final contours of the scheme will be announced by May.
The finance ministry is also understood to be working on safeguards for investors in the scheme. Accordingly,investors will be allowed to invest only in the top 100 stocks traded on the Bombay Stock Exchange and the Nifty 50.
However,to spur its disinvestment agenda,the government is likely to permit investors to tap the public offers by state run firms.
There is already a portion of shares that is reserved for retail investors in every IPO or FPO by public sector firms. Investors into the RGESS will be encouraged to participate in these public offers as well, the official said.