BSDA stands for Basic Service Demat Account. It is a specific demat account designed by the SEBI (Securities and Exchange Board of India) to enable easier and more affordable investments in stock markets. BSDA comes with lower maintenance and dematerialization costs and are usually ideal for investors with relatively smaller portfolios or newcomers to the market.
SEBI introduced these accounts to lower the financial burden on smaller investors while encouraging higher retail participation in the Indian stock market. At the same time, these accounts are only available to those meeting a particular criteria, including holding only a single demat account where they are the first/sole holder. BSDA accounts also have limits on holding value. If the holdings exceed this threshold, then the account may be converted into a full-service demat account or FSDA.
Now that you have an idea of what a BSDA means, it is important to look at some of its key features. These include the following:
AMCs (annual maintenance charges) are imposed by DPs (depository participants) to maintain demat accounts, and it is the same for Basic Service Demat Accounts. The amount may vary, although it is usually lower for these accounts in comparison to regular demat accounts, particularly if the portfolios are smaller.
AMCs are based on the holding value, with zero AMCs till a particular limit, and regular demat charges apply for exceeding this amount.
The eligibility criteria for BSDA accounts include the following:
Yes, it is technically possible to convert a full-service demat account (FSDA) into a BSDA account, although it is subject to SEBI verification and other conditions. The primary criterion is that the investor should not have any other demat accounts, and the value of holdings in the BSDA should be below ₹10 lakh. You can reach out to your DP for guidance on the process and submit a formal request for conversion with all necessary documents. After verification and approvals, the DP will carry out the conversion process accordingly.
Note that if the holding value crosses the limit, then the BSDA will be converted to a full-service demat account again. Opening another demat account will also trigger the same conversion.
A basic service demat account comes with several benefits, including the following:
The process of opening a BSDA account is simple and does not take too much time. Let’s say you’re setting up this account at Groww. The steps to be followed include:
As per SEBI guidelines, the Annual Maintenance Charges (AMC) for BSDA accounts are capped as follows:
Value of Holdings |
Maximum AMC Permitted |
---|---|
Up to ₹4 lakh |
Nil |
₹4–10 lakh |
₹100 per year |
Above ₹10 lakh |
Not eligible for BSDA; regular demat AMC may apply |