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How to convert a Demat Account to a Basic Service Demat Account (BSDA)

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:

  1. The investors must have or propose to have only one demat account to their name, where they are the first or sole holder. Across all depositories, such investors may only have one BSDA in their name.
  2. The value of the securities held by the investor in their account must not exceed INR two lakhs at any point of time. In the event that the value of holdings does cross this threshold, the BSDA account will once again convert to a regular (non-BSDA) demat account and DPs may levy charges as are applicable to regular demat accounts.


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.

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account


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