SEBI, in order to promote the participation of retail investors in the equity market and IPO, offers free or low-cost demat accounts which are commonly known as Basic Service Demat Account (BSDA). It aims to provide the basic services of demat account at low cost and making investing effective. Basic Service Demat Account (BSDA) is a special kind of demat account for individual investors with small portfolios below Rs 2 Lakh. The BSDA holders do not need to pay account maintenance charges (AMC) if the value of the holding is below Rs 50,000. If you hold this account, the value of your securities should not exceed Rs 2 Lakh at any point.
Basic Service Demat Account (BSDA) is an account that can be open by individuals only. This account can be open or held by individual investors who don’t invest regularly in stocks, mutual funds, bonds, ETFs, etc. According to SEBI, most of the demat account holders do not use their account much for trading and investments but still pay high maintenance fees. Therefore, to help such investors, SEBI came up with Basic Services Demat Account.
Investors with a regular demat account can also convert to BSDA on the basis of holdings. This holding shall be determined by the Depository Participants or broker, as the case may be, on the basis of the daily closing price or NAV of the securities or units of mutual funds. The demat account is converted into a BSDA, the AMC can be up to Rs. 100 + GST.
Eligibility Criteria for BSDA:
There are specific eligibility criteria decided by SEBI for holding a BSDA account. He/she can open or hold a BSD account only if they pass through the following criteria:
- He/she should be an individual and sole owner of the account.
- Investors should not hold any other demat account.
- Shares’ total value should not exceed Rs 2 Lakh at any point in
The depository participants keep calculating the daily closing prices of securities to determine the portfolio size. If they find it exceeding Rs 2 Lakh, it will convert your BSDA account into a normal demat account.
Annual Maintenance Charges (AMC) of BSDA:
| Value of holding | Account maintenance charges (excluding GST) |
|---|---|
| Up to 50,000 | NIL |
| Rs 50,001 to Rs 2,00,000 | Rs 100 |
| Above Rs 2,00,000 | Charges levied by the broker on non-BSDA account |
Other charges:
Brokers will provide two copies of the physical statement of account for free during the billing cycle. The additional physical statement will be provided at a fee not exceeding Rs 25 per statement.
Other charges include bounce charges, rejection of a Delivery Instruction Slip (DIS), and rejection of a Demat Request Form (DRF).
Registration to SMS Alerts:
Every BSDA holder has to register mandatorily for the SMS alert (SMART) facility.
Services Provided for BSDA:
All the major services of BSDA are similar to normal demat accounts except a few. These services are:
- Transaction Statement: If your BSDA account is active and the balance is maintained then you will get the transaction statement of your account quarterly. But if you don’t have any transactions in a quarter and you have no security balance then you will not get the transaction reports or statements.
- Annual Holding Statement: Only one holding statement of the account is sent to the registered address of the account holder. These documents will be sent in physical or electronic form i.e. via e-mail as per the account holder’s choice.
- Delivery Instruction Slip: Two delivery instruction slips will be provided to you for free at the time of opening the Basic Services Demat Account.
Conclusion:
BSDA is a great facility provided to small investors so they can save extra cost but can also participate in the equity markets without worrying about the prohibitive demat cost. It saves two important costs for investors, i.e., AMC and physical statement charges. Other charges like per folio on debits and DRF charges will continue to apply in the case of BSDA accounts.
