SEBI launched the Basic Services Demat Account (BSDA) model in 2012. The goal was to make demat fees less burdensome for investors with small portfolios. So, let’s take a closer look at the BSDA Account with related details.
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Basic Services Demat account
Basic Services Demat Account (BSDA) is a special category for Individual investors with a small portfolio of up to INR 50,000 and who do not or cannot invest frequently in stocks, bonds, ETFs, mutual funds, and other securities.
However, charges for portfolios from INR 50,001 up to INR 2,00,000 are also less then investors who hold assets more INR 2,00,000.
SEBI believes that the large percentage of DEMAT account holders do not utilize their accounts as frequently as they should and pay excessive maintenance costs as a result. As a result, they created this account type to assist such investors.
One condition for BSDA is that you must have just one DEMAT account throughout all depositories, i.e. the BSDA must be your sole DEMAT account.
Annual Maintenance Charges Slabs
The Annual Maintenance Charges (AMC) for BSDA will be calculated on a slab basis based on the worth of the holding as shown below:
| Asset worth | AMC Fees |
| Up to INR 50,000 | No Charges |
| INR 50,001 to INR 2,00,000 | INR 100 |
| Above INR 2,00,000 | INR 300 |
Note
- For both BSDA and ordinary accounts, the commission and taxes are the same.
- The DPs (in this scenario, a broker) will measure the worth of the holding based on the daily closing price or NAV of the assets or units of mutual funds. If the worth of an investment in such a BSDA exceeds the statutory threshold at any point during the period for which it is levied, the DPs may levy standard account (non-BSDA) fees from that point on.
Who is eligible to open a BSDA demat account?
The basic services demat account (BSDA) is a type of demat account that offers restricted services to individual investors at a lower cost.
To put it another way, the BSDA is a no-frills-demat account. Anyone can open a BSDA account, and current demat accounts can be transformed into no-frills BSDA accounts if certain requirements are met.
There are two points to keep in mind here. To begin with, the BSDA facility is only available if the investor is the only owner of the property.
In the case of shared accounts, BSDA is not permitted. Second, an individual is only allowed to have one BSDA account throughout all DPs to prevent share holdings from being split to bypass the value criteria.
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Limitations in Bsda Account
At any given time, the user must ensure that the value of assets kept in his basic trading account does not exceed INR 2,00,000. The DP decides on this depending on market value.
So, if you purchased shares costing INR 1,50,000 and they have now risen to INR 2,20,000, you are not qualified for BSDA and must pay the standard charges.
All depository participants (DPs) are required by SEBI to offer basic demat accounts with fewer services and lower charges. If the prerequisites are met, no DP can reject to run your demat account as a BSDA account.
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Conditions
For BSDA accounts, SEBI stipulates the following terms:
- If the valuation of the holding is less than Rs50,000, the DP is not required to charge an AMC fee.
- If the worth of the investment is within Rs50,001 and Rs200,000, the DP is allowed to charge a modest AMC of up to Rs100 for the entire year.
- If the value of the BSDA’s holdings surpasses Rs200,000 at any point throughout the year, the DPs can impose the same fees as ordinary (non-BSDA) accounts from that moment on.
How to Convert an Existing Account into a BSDA account?
The SEBI has given the DPs permission to estimate the worth of an investment using the daily closing price (NAV in case of mutual funds).
If the amount of your assets surpasses the prescribed slabs, the DP may charge you the same as non-BSDA demat accounts.
The DP turns these accounts into BSDA accounts and charges proportionately lower expenses if the value is less than Rs50,000 or Rs2 lakhs on the statement date.
Reasons why SEBI launched BSDA Account
SEBI has received a number of ideas and comments regarding demat account costs, particularly from small individual investors.
Considering individual investors benefit from having a demat account, SEBI began comprehensive talks with all participants to address their concerns and recommendations.
In addition, the SEBI Board decided to broaden the scope of initial public offerings (IPOs) to assist regular investors. To promote financial inclusion, stimulate the use of demat accounts, and lower the cost of retaining assets in demat accounts for retail individual investors, all depository participants (DPs) have agreed to provide a “Basic Services Demat Account” (BSDA) with restricted services and lower fees.
Other Charges & factors of a Basic Services Demat Account
These are some charges & factors you need to consider while opening a BSDA Account:
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Transaction Statements
At the conclusion of every quarter, transaction statements must be delivered to the BO. If there are no trades in a given quarter, that quarter’s trade statement may be skipped.
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Holding Statement
In the case of accounts with no trade and no amount, one yearly physical statement of holding will be sent to the BO’s indicated address, and for the remaining accounts, one annual statement of holding will be issued in digital or physical form, depending on the BO’s preference.
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Charges for Statements
The digital statements will be provided for free. The DP must give at least two free physical statements within the billing period in the case of physical statements. A cost of not more than Rs.25/- each extra physical statement may be collected.
Can an Investor maintain more than one demat account under the BSDA category?
No, where the client is the first / single holder, only one account can be formed / kept under the BSDA Segment.
The worth of the assets held in the demat account should not surpass Inr. two lakhs at any period.
The first/sole owner should not have any other demat account with him/her as the first/sole client among depositories.
How can a DP get the list of their eligible BOs for BSDA?
On a monthly basis, CDSL will offer a DP-by-DP number of current BOIDs qualified for BSDA, with the file being generated on the last business day of each month and being stored in the billing folders of the individual DPs by the first week of the next month.
Conclusion
For people who have small investments Basic Services Demat Account is really helpful for them as it saves the charges on their investment.
This is all from our side regarding BSDA Account. Let us know your views basic service demat account in the comment section.
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Documents Required for Demat Account
Frequently Asked Questions About basic service demat account
What is basic service demat account?
A BSDA is a DEMAT account designed for small individuals who don't or can't participate in equities, bonds, ETFs, mutual funds, and other securities on a regular basis. The BSDA can be activated and managed for a lower price. SEBI created this account type to assist such investors.
What is full service demat account and basic service demat account?
The sole difference between a BSDA and a standard demat account is the maintenance fees. If you open a BSDA demat account, you won't have to pay any maintenance fees if your assets are less than INR 50,000.
What is demat service charge?
The majority of Depository Participants (DPs) pay custodian expenses to the depository as one-time payments, and a few do not charge any custodian costs to the investor for keeping a demat account. Custodian fees are charged on a monthly basis by DPs. These fees are calculated based on the number of securities kept in a demat (also known as a dematerialized) account. For each ISIN, the expenses are typically between Rs 0.5 and Rs 1.
Which bank demat account is best for beginners?
Banks charge much higher fees then discount brokers. So If you are planning to open with ICICI bank or HDFC bank be prepared to pay much more charges then Standard brokers like Zerodha n Upstox charge to their clients.
Which is the cheapest demat account in India?
Groww, Zerodha, Upstox are some of the Cheapest Demat Accounts in India.
