Stock trading is a financial activity of buying and selling shares in the secondary market at a certain price in exchange for profit or gain. The people who buy and sell shares in the market are called traders. If you are a person who’s likely to start trading or have an inclination to trade like the other traders, all you need to have is a BSDA account, also known as the Basic Service Demat account. This Demat account is different from a regular traditional Demat account.
Although both accounts are for trading purposes, a BSDA account is for those traders who trade actively but less frequently, say, once or twice a month, or maybe once in a quarter. Now, you might be wondering what investing or trading in shares has anything to do with a BSDA Demat account. Well, don’t worry; we are here to help you understand every concept.
Before we dive into the Basic Service Demat Account, we’ll give you a brief introduction to the Demat account. A Demat account or dematerialized account is opened at a registered depository participant to hold shares, ETFs, commodities, and mutual funds and store them in an electronic form. National Securities Depositories Limited (NSDL) and Central Securities Depositories Limited (CDSL) govern and assist all the trades done by the depository participants.
The Demat account gives the trader an entry licence to take part in the financial markets. Whenever a trader buys or sells shares and other commodities, they record it in the Demat account. Depository participants act as a facilitator between traders and depositories. Their role is to ensure all the trading transactions are going smoothly.
As you now have understood the basics of a Demat account, the BSDA Demat account or Basic Service Demat Account is more or less the same. However, there’s a subtle difference attached to it. As the Demat account incurs annual maintenance charges irrespective of the number of trades, SEBI has introduced the BSDA account or BSDA Demat account or Basic Service Demat Account in 2012, with an aim to encourage small investors and traders who like to invest time after time.
The main advantage Basic Service Demat Account claims to have is that traders with a smaller portfolio, say, Rs. 1 lakhs or less, are exempted from paying any BSDA charges, unlike the regular Demat account. There are several other benefits of having a BSDA Demat account, like no dematerialized cost, no physical statement charges, annual maintenance charges for the BSDA account are determined based on slab holding value.
To augment the retail investors partaking in the debt securities market, SEBI has made some revisions to the BSDA account charges. There are no annual maintenance charges if you hold debt securities of 1 lakh in your BSDA account. Between Rs. 1 lakh to Rs. 2 lakhs, you’ll be imposed with AMC charges of Rs 100. And above Rs. 2 lakhs will incur AMC charges of Rs. 300.
So, if you are an enthusiastic trader looking to grow your money by investing in the stock market, then open a free demat account right away, and start trading. However, if you are opening a BSDA account or BSDA Demat account, keep the new revised charges made by SEBI in mind, and proceed accordingly.
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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