What is a Basic Service Demat Account?
A basic service demat account, or a BSDA account, is a Demat account that is designed to cater to the needs of small-scale investors. In other words, it is a type of Demat account that is intended for investors who do not or cannot regularly make investments in stocks, mutual funds, and other securities.
The Securities and Exchange Board of India (“SEBI”), vide a circular dated 27 August 2012, introduced this facility after extensively consulting with multiple stakeholders. This decision to introduce the concept of BSDA was based on the need to achieve “wider financial inclusion”, encourage holding of demat accounts among small investors, as well as to reduce the cost of maintaining securities in a demat account. As per this circular, all depository participants (“DPs”) were required to make this facility available to the public with limited services and reduced costs.
How to convert Demat Account to BSDA?
Initially, after this facility was introduced, the process to convert a regular demat account to a BSDA was a mechanical one: investors wishing to do so would have to manually request their DP to process the conversion.
However, this is no longer the case. As per the regulations currently in place, a demat account will be converted to a BSDA automatically if certain criteria are met. These are:
It must also be noted that the Annual Maintenance Charge (“AMC”) payable by investors is structured on a slab basis depending on the aggregate value of the investors’ holdings. As such, debt securities up to INR one lakh will attract no AMC. However, a maximum fee of INR 100 shall be levied on debt securities above INR one lakh and below INR two lakhs.
For non-debt securities, no AMC shall be levied when the value of the holdings is below INR 50,000, whereas a maximum AMC of INR 100 shall be charged on holdings greater than INR one lakh and less than INR two lakhs.
If you wish to open an online demat account, head to a trusted broker so as to ensure a smooth and transparent process.
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