Basic Service Demat Account: What is it?

The Basic Service Demat Account (BSDA) is a type of demat account designed for individuals with assets of less than Rs 2 lakh. According to SEBI, the majority of demat account users do not use their accounts as frequently as they should, hence, this account type was established to aid such investors. Continue reading to know more.

Kirti Jha, MintGenie Team
Updated23 Mar 2022, 07:58 AM IST
The Basic Service Demat Account (BSDA) is a type of demat account designed for individuals with assets of less than Rs 2 lakh.
The Basic Service Demat Account (BSDA) is a type of demat account designed for individuals with assets of less than Rs 2 lakh.(Photo by Lukas Blazek on Unsplash )

Individuals who wish to trade on the stock market must first open a demat account, which they can use to execute trades and store their purchased shares and other securities.

A BSDA is a demat account designed for small investors who do not or can not invest in stocks, bonds, ETFs, mutual funds, and other securities on a regular basis. It is possible to open and maintain the BSDA at a lower cost.

SEBI believes that the majority of demat account holders do not utilise their accounts as frequently as they should and pay excessive maintenance costs as a result. Hence, they created this account type to assist such investors.

What is a Basic service Demat Account?

SEBI offers free or low-cost demat accounts, also known as Basic Service Demat Accounts, in order to encourage regular investors to participate in the equities market and IPO. Its goal is to make investment more efficient by providing basic demat account services at a minimal cost.

The Basic Service Demat Account (BSDA) is a type of demat account designed specifically for individual investors with holdings under Rs 2 lakh. If the value of the holding is less than Rs 50,000, BSDA holders are exempt from paying account maintenance charges (AMC). The value of your securities in this account should not exceed Rs 2 lakh at any time.

While BSDA has various advantages, there are some requirements that must be satisfied in order to open a Basic Service Demat Account. The following is a list of important factors to remember.

  • The account should be solely owned by the investor.
  • There should be no other Demat accounts in the investor's name.
  • The BSDA category allows for only one Demat account.
  • At no time should the total value of the BSDA shares surpass Rs. 2 lakh.
  • If the investor has a joint account, he or she should not be the account's first holder.

Services Provided in a Basic service Demat account

Transaction Statement: If your BSDA account is active and your balance is maintained, you will receive a quarterly transaction statement. However, you will not receive transaction reports or statements if you have no transactions in a quarter and no security balance.

Delivery Instruction Slip: When you create a Basic Services Demat Account, you will receive two delivery instruction slips for free.

Annual Holding Statement: Only one account holding statement is delivered to the account holder's registered address. According to the account holder's preference, these documents will be supplied in either physical or electronic form, i.e. by email.

Fees and Additional costs

Annual Maintenance Fees

  • Up to Rs 50,000: There are no maintenance fees on this level.
  • Between Rs 50,001 and Rs 2,00,000: The annual fees here are 100 rupees.
  • Above Rs. 2,00,000: This is the most expensive slab, with a fee of 300 rupees.

Physical Assertions

During the billing cycle, two hard-copy statements are supplied free of charge. Additional statements are available for a small fee.

Additional Fees

Check bounce costs, rejection of a Delivery Instruction Slip (DIS), rejection of a Demat Request Form (DRF), and regular transaction and other charges are just a few examples.

Steps to convert a Demat account to a BSDA account

Only under particular circumstances may an existing demat account be converted to a BSDA account. The regulator has the authority to conduct audits of depositories. Wherever possible, the depository will convert the demat account into a BSDA account. Your account will subsequently be changed to a BSDA account by the regulator.

It is critical that you do not have any other demat accounts before converting your present demat account to BDSA. AMC will be calculated based on the greatest value of your investment. However, if your holding value exceeds the criteria or you have an active demat account with another broker, your BSDA account will be converted into a regular demat account.

Small investors can benefit from BSDA since it allows them to save money while still participating in the equity markets without having to worry about exorbitant demat costs. It saves investors money on two major expenses - AMC and physical statement charges.

However, other fees, such as per-folio debits and DRF fees, will continue to apply to BSDA accounts.A basic service demat accounts may be a suitable choice for individuals who are just getting started in the investing industry and do not want to deposit huge sums of money.

 

Opening a Demat account

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First Published:23 Mar 2022, 07:58 AM IST
HomeMoneyPersonal FinanceBasic Service Demat Account: What is it?

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