What Is BSDA - Basic Service Demat Account?

Last Updated: 14 Jan 2025

The concept of Basic Services Demat Account (BSDA) was introduced by SEBI in 2012. The idea was to reduce the burden of demat charges on investors with a small portfolios below a threshold of Rs2 lakhs. Demat accounts entail a plethora of charges. SEBI has already barred account opening charges and charges for credits to the demat account. But there are other charges that are implicit in a demat account and they can be enumerated as follows:

• Annual maintenance charges (AMC); normally Rs600-800 per year
• Per folio charge on debits to the demat account
• Charges for physical statements mailing to the customer
• Charges for dematerialization of physical shares and for remat
• Additional charges like bounce charges, rejection of DIS, rejection of DRF etc.

BSDA basically saves two important costs for the demat account app holder. Firstly, the AMC is waived based on the slab of holdings that the holder falls into on the cut-off date. Secondly, BSDA account holders are only entitled to receive online statements and not physical statements. Other charges like per folio on debits and DRF charges will continue to apply in the case of BSDA accounts too.

The BSDA cut off value is determined by adding up the value of all holdings in the demat account including shares, mutual funds and ETFs.

Who is eligible to open a BSDA demat account?

The basic services demat account (BSDA) essentially provides limited services at reduced costs to retail investors. In other words, the BSDA is one type of no-frill-demat account. Any individual is eligible to open a BSDA account and even existing demat accounts can be converted into no-frills BSDA accounts if the conditions are satisfied. There are two things to remember here. Firstly, the BSDA facility is only applicable in case the investor is the sole holder. BSDA is not permitted in case of joint accounts. Secondly, an individual is only permitted to have one BSDA account across all the DPs to avoid splitting of share holdings to circumvent the value criteria.

What are the Eligible Limits for the BSDA Account?

The individual needs to ensure that the value of securities held in his basic trading account is not more than Rs2 lakh at any given point of time. This is determined by the DP based on market value. So, if you bought shares worth Rs1.50 lakhs and if they have now appreciated to Rs2.20 lakhs, then you are not eligible for BSDA and the normal charges will apply in this case. As per SEBI stipulations, all depository participants (DPs) will make basic demat accounts available with limited services and reduced costs. No DP can refuse to operate your demat account as a BSDA account if the conditions are fulfilled. So, what are the conditions?

SEBI stipulates the following conditions for BSDA accounts:

• No AMC charges shall be levied by the DP if the market value of holding is up to Rs50,000.
• If the value of holding is between Rs50,001 and Rs200,000, the DP is authorized to levy a nominal AMC but not exceeding Rs100 for the full year.
• In case, the value of holdings in the BSDA exceeds Rs200,000 at any point during the year then the DPs can levy charges as applicable to regular (non-BSDA) accounts from that date.

How to apply for BSDA status for existing demat accounts

SEBI has authorized the DPs to calculate value of holding on the basis of the daily closing price (NAV in case of mutual funds). If the value of your holdings exceeds the prescribed slabs, the DP can automatically charge the same as regular non-BSDA demat accounts. However, if the value is below Rs50,000 or Rs2 lakhs on the billing date, the DP converts these accounts into BSDA accounts and charges appropriately lower costs.

Features of Basic Service Demat Account

A BSDA is a special Demat account that SEBI introduced to promote easy and low-cost access to the securities market for small investors. The following are the features unique to a BSDA:

Quarterly Transaction Statement

BSDA holders are issued a quarterly transaction statement with a complete record for three months. (Some will not provide a statement at all if there are no transactions.) The statement is available in electronic and paper format. The e-copy is free , and a hard copy will be ₹25 each after two.

Annual Holding Statement

Investors receive an annual holding statement summarising their holdings. Depending on the user’s profile, the statement is available electronically or on paper. When it is in electronic format, it is sent by mail to the registered address.

SMS Alerts

SMS alerts about transactions are sent to investors on their registered mobile numbers, keeping them updated about all the purchases and activities taking place in a BSDA account.

Delivery Instruction Cards

Two delivery instruction slips are provided to investors when their BSDA is opened. These cards are required for transferring securities from one demat account to another, adding an additional layer of convenience for the account holder.

Benefits of Basic Service Demat Account

• No Annual Maintenance Charges (AMC): Investors with holdings up to ₹50,000 are exempt from AMC, making it cost-effective.
• Low AMC for Higher Holdings: Nominal AMC applies to holdings between ₹50,001 and ₹2 lakh, ensuring affordability.
• Periodic Statements: Quarterly transaction and annual holding statements provide transparency and easy tracking.
• Real-Time SMS Alerts: Investors receive notifications for every transaction, keeping them updated.
• No Minimum Balance Requirement: BSDA accounts have no mandatory balance criteria, offering flexibility.
• Inclusive and Affordable: It is designed for small investors and provides access to demat services at minimal cost.

Frequently Asked Questions

What is the difference between BSDA & non-BSDA accounts?

A BSDA (Basic Services Demat Account) is a simplified version of a demat account with no annual maintenance charges if the holding value is below ₹50,000. Non-BSDA accounts, on the other hand, charge annual fees regardless of the holding value, making BSDA more cost-effective for small investors.

How do I know if my account is a BSDA account?

To check if your account is a BSDA, log into your demat account with the depository participant (DP) or contact them directly. If your account has a holding value below ₹50,000 and doesn’t incur annual maintenance charges, it qualifies as a BSDA.

What are the types of Demat accounts?

There are three types of demat accounts in India:

• Regular Demat Account: This is for all investors and is subject to annual maintenance charges.
• BSDA (Basic Services Demat Account): This is for small investors with holdings under ₹50,000 and offers minimal charges.
• Repatriable Demat Account: This is for NRIs to allow the transfer of securities abroad.

What are the new rules for BSDA demat accounts?

The new rules for BSDA accounts include a cap on the value of securities held, limited to ₹50,000, to avoid annual maintenance charges. If the account exceeds this value, it automatically converts to a non-BSDA account. This ensures cost efficiency for small investors while encouraging transparency.