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A Basic Service Demat Account (BSDA) is a SEBI-regulated Demat account that provides fundamental depository services at a reduced or no annual maintenance charge (AMC), subject to holding limitations. AMC is zero for holdings below ₹4,00,000 and capped on larger amounts.
SEBI introduced the BSDA account for investors who have smaller portfolios and do not want value-added Demat services. This article covers what a BSDA account is, how it operates, the qualifying requirements, fees, and primary benefits.
Key Takeaways
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A BSDA is a cost-effective Demat account introduced by SEBI for small and retail investors.
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AMC for holdings between ₹4,00,001 to ₹10,00,000 is capped at ₹100 + GST per year.
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Only one BSDA is allowed per investor, subject to eligibility conditions.
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If holding limits are exceeded, the account is converted into a regular Demat account.
What is a Basic Service DEMAT Account?
Basic Service Demat Account (BSDA) is a special type of DEMAT account that was introduced in 2012 by SEBI (Securities and Exchange Board of India). An account is considered to be a BSDA account based on the total value of securities in the account. So, it requires much less of an investment compared to a general Demat Account and is mainly intended for small investors of stocks, ETFs, mutual funds, etc.
Features of BSDA
A Basic Service Demat Account (BSDA) offers the following key features aimed at providing essential Demat services at lower costs, making it ideal for small investors:
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Essential Demat Services: Electronic security holdings, periodic transaction statements, and account notifications.
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No Minimum Balance Requirement: Investors are not obliged to maintain a certain minimum portfolio value to keep their account active.
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Account Conversion: Accounts with balances above ₹10,00,000 are automatically converted to normal Demat accounts.
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Limited Account Per Investor: Each investor is permitted to have just one BSDA across all deposits.
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Cost-effective for Small Investors: Reduces recurrent maintenance expenditures while providing access to essential Demat services.
Understanding AMC in BSDAs
Annual Maintenance Charges (AMC) are fees levied by Depository Participants for maintaining a basic services demat account BSDA. These charges are generally lower than those applied to regular Demat accounts and are linked to the total value of securities held.
If the total value of holdings is up to ₹4,00,000, BSDA will not charge any AMC. AMC for holdings between ₹4,00,001 to ₹10,00,000 has been set at ₹100 + GST per year. If holdings surpass ₹10,00,000, the account becomes a traditional Demat account rather than a BSDA.
A BSDA can only be held by an individual investor, who must be the single or initial holder and may only have one BSDA across all depositories. The account provides electronic holding of stocks, transaction statements, and basic account services but no value-added features.
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Value of Holdings |
Maximum AMC |
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Up to ₹4,00,000 |
NIL |
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More than ₹4,00,000 but up to ₹10,00,000 |
₹100 + GST per year |
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Above ₹10,00,000 |
BSDA not applicable (regular AMC applies) |
Note: These limits are defined in SEBI’s circular for BSDA accounts, effective since September 1, 2024.
Benefits of BSDA
The BSDA has several benefits when it comes to cutting down on costs and expenses. Here is a list of the key benefits of BSDA.
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Lower or No AMC: Investors with small portfolios could profit from zero or reduced AMC, based on the value of their holdings. Source: mlbsec.com.
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Reduced Dematerialisation Charges: The costs of converting physical securities to electronic form are reduced.
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Simplified Account Management: Essential services such as periodic statements, notifications, and portfolio management are available without the need for sophisticated features.
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Increased Affordability: Makes stock market investment more accessible to new investors and those with small holdings.
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Promotes Financial Inclusion: By offering a low-cost entry point, SEBI is able to further its goal of increasing stock market participation.
How to Open a BSDA
Opening a BSDA is a straightforward process once you understand what a BSDA account means and whether you meet the eligibility criteria.
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Visit Angel One: Go to your preferred DP website or mobile app and navigate to the Demat account opening section. For example, Angel One typically allows you to establish a demat account online, and if you match the requirements, it will be immediately categorised as a BSDA.
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Submit Personal Data: Provide your PAN, Aadhaar, and bank account details.
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Complete KYC: Finish the online KYC procedure by submitting the necessary documentation and completing e-sign verification.
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Check Eligibility: Confirm that you do not have any other Demat accounts as the first or only holder, since each investor is only permitted one BSDA across all depositories.
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Account Classification: Once your information and eligibility have been validated, the DP will categorise your account as a BSDA based on SEBI holding restrictions.
What are the Eligibility Criteria for BSDA?
While BSDA can come along with several benefits, there are certain criteria to be met to be eligible to open a Basic Service Demat Account. Here is the list of the criteria to keep in mind.
1. The investor should be the sole owner of the account.
2. The investor should not have any other Demat account.
3. Only one Demat account can be held under the BSDA category.
4. The total value of the BSDA shares should not exceed the stipulated limit at any point.
5. If the investor has a joint account, he/she should not be the first holder of the account.
What are the Eligible Limits for the BSDA Account?
According to SEBI guidelines, the value of the securities held in a BSDA account has the following limits:
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Up to ₹4,00,000, the AMC is NIL or 0.
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₹4,00,001 to ₹10,00,000, the AMC is capped at ₹100 + GST per year.
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If it is above ₹10,00,000, then the account is automatically converted into a regular Demat account, and standard charges can apply.
For instance, AMC will apply at the capped rate of ₹100 + GST if you own securities worth ₹4,50,000. However, if the value is under ₹4,00,000, there will be no charges.
As per SEBI’s stipulation, Depository Participants (DP) must create BSDA accounts with limited services and reduced costs. They can’t refuse to operate your account as a BSDA account as long as it fulfils the eligibility criteria.
How do I Convert my Demat Account to a BSDA Account?
An existing Demat account may only be changed into a BSDA if the investor fulfils the SEBI eligibility conditions, which include being the single or initial holder, owning no other BSDA across depositories, and maintaining holdings within the BSDA limits.
To begin conversion, send a request to your Depository Participant (DP). The DP will check your eligibility and designate the account as BSDA. The AMC will be calculated based on the highest value of holdings throughout the billing period.
If the account exceeds the legally required holding limits or there is another active Demat account, the account will not be classified as BSDA and will be immediately converted to a standard Demat account.
Conclusion
A BSDA demat account is a suitable option for investors who want to participate in the stock market with lower costs and limited services. It is designed for individuals with smaller portfolios and infrequent trading activity. With reduced annual maintenance charges and clearly defined holding limits, it helps minimise expenses while maintaining essential Demat facilities. However, investors must ensure they meet the eligibility criteria, as exceeding the prescribed limits or holding multiple Demat accounts can lead to conversion into a regular Demat account.
