Investors require a demat account in order to operate in the stock market. It is usually investors with a large investment portfolio who seek to diversify. The Securities and Exchange Board of India (SEBI), recognizing the constituency of small investors with small investment capacity but an eagerness to invest and trade in the stock market, launched the Basic Services Demat Account or BSDA in 2012.
A BSDA account allows only investors of an investment portfolio of Rs 2 lakh or under to access the stock market.
Another important difference between a traditional demat account and a BSDA account is that while multiple accounts of the former can be opened with several Depository Participants, only a single BSDA account can be opened across all Depository Participants.
The BDSA account is based on SEBI’s realization that a lot of Demat accounts are left unused and idle and that account holders end up paying high fees for them. BSDA account is one type of no-frill-demat account meant to reduce costs to retail investors.
Existing demat accounts can also be converted into BSDA account and any individual is eligible to open a BSDA account. While there are several benefits of BSDA accounts, they have certain criterias to be fulfilled.
The opening of an online BDSA account is contingent on the demat account meeting the conditions mentioned below. Opening a BSDA account offline requires a person to tick the option availing of the BSDA facility while filling the Demat application form.
The annual maintenance charges (AMC) structure for BSDA is on a slab basis. SEBI has stipulated the following conditions for a BSDA account:
Depository Participants are authorized to determine the value of holdings on the basis of the daily closing price and Net Asset Value in case of mutual funds. In case the value of a holding in a BSDA account exceeds the limit as per the prescribed criterion, then Depository Participants are authorized to impose charges as applicable to regular or non-BSDA accounts from that date.
A BSDA account has several important features and benefits, some of them include:
Firstly, it is possible to convert a normal demat account into a BSDA account but there are certain conditions that need to be met. The regulator has the right to check with the depositories. Once checked, wherever applicable, the depositories have the right to exercise to convert the demat account into a BSDA account and once done, the status of your demat account will change to a BSDA account.
Just ensure that you do not have any other demat account apart from the one you wish to convert to a BSDA account. Based on the highest value of your holding, the AMC will be charged accordingly. However, if the threshold is crossed by your holding value or if you have a demat account with another broker, then your status will change to non-BSDA account.
This is not possible. An investor can only open one account under the BSDA category provided he is the sole owner and does not possess any demat account across depositories in the capacity of a sole owner.
This is possible, provided no other accounts are held under the same PAN no. as a sole holder across depositories and the value of securities held in the demat account should not exceed Rs. two lakhs at any point of time.
The list of Depository Participant wise list of BOs for BSDA will be provided by the Central Depository Services Ltd. (CDSL) on a monthly basis. The file for the same will be generated on the last working day of every month and will be kept in the billing folder of the respective DPs by the first week of the next following month.
Yes, registering for the SMS alert facility or SMART facility is mandatory for all BSDA account holders.
In a non-BSDA account, the investor does not have a limit on holding value of stock. In a BSDA account, the investor cannot hold more than Rs. 2L at a given point of time. For example, if you bought securities worth Rs. 1.5L and the value of the securities increases to Rs. 2.20L then you no longer come under a BSDA account and normal demat charges will be levied.
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