What Is BSDA - Basic Service Demat Account?
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 under:
- 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 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 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.