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Do you hold a Demat account or planning to get one? Then you should know what is a Basic Service Demat Account, because it can be helpful for you if you are planning to trade very less and want to save on yearly maintenance charges.
Basic Services Demat account as its name suggests is a basic version of a full-fledged Demat account which provides basic level services. It’s ideal for those whose portfolio size is quite small. We will look at details in this article. But before that, do you know what is Demat account at the first place?
What is Basic Services Demat Account?
Demat or Dematerialized Account means an electronic account which holds various financial securities (especially shares) in an electronic format securely. Demat account is a compulsory account for those who want to buy company stocks from stock market.
Demat accounts are under the control of SEBI i.e. Security and Exchange Board of India. Now, from 27 August 2012, SEBI has brought a guideline that every demat provider will have to provide “Basic Demat accounts” available to every beginner in share market so that it can encourage the people to invest into trading. This will be helpful for achieving wide financial inclusion.
So all those investors, who want to trade less and have portfolio size of small amounts can open a basic services Demat account (BSDA) and save on the annual maintenance charges.
Where to open Demat account or BSDA account?
You can open your Demat account or BSDA at any bank like SBI, ICICI, HDFC, Kotak Mahindra and many other banks, or with a stock broking companies Angel broking, 5Paisa, Sherkhan etc. directly. Opening both Demat Account and Basic Service Demat Account is free at both banks and broking companies, but again the AMC varies.
These banks and broking companies provide free services for the first year and from 2nd year onwards they may start to apply charges on the basis of transactions. So before applying for BSDA or Demat account check for all the details on the website of that particular bank.
How are Basic Services Demat account different?
Basic services Demat Account is a Demat account which can be opened with any Demat Service provider of your choice, when your holdings are expected to be below Rs.2,00,000/- .
If we are maintaining holdings of value less then Rs 50,000/- then no annual maintenance will be charged from our account. In case our holdings are between 50,000 to 2,00,000/- then the annual maintenance of Rs. 100 /- will be charged.
In case our holdings exceed 200000/- then our BSDA account will be converted into Regular Demat account. This initiative is to promote retail investment and to promote retail investors to hold securities in Demat form.
How is the value of holding determined?
The DP i.e. Depository Participants will keep calculating the daily closing prices of securities (stocks , mutual fundsetc.) to determine the portfolio size.
This will be calculated after every trading day and then it will be compared with the limits set for your BSDA account. The moment your portfolio value exceeds the limits, you will be charges the fees for the normal Demat account or the slab you fall into on a pro data basis.
Check the video below for more.
Services provided for Basic Service Demat account
Now you must be clear about normal Demat Account and BSDA. Generally Basic Service demat Account provides all the major facilities covered in normal Demat Account. But other that those services, there are few services in BSDA which are little bit different than normal Demat Account. These services are as given below:
1) Transaction statement:
When your BSDA account is active and balance is maintained then you will get the transaction statement of your account quarterly. But if you don’t have any transactions in a quarter and your no security balance then you will not get the transaction reports or statement.
The statements are available in two forms i.e. electronic and physical document or hard copy. Electronic statements are free of cost; you don’t need to pay any charges for that. But if you want the statement in hard copy then your first two statements will be provided for free of cost and for additional statements you will have to pay the charge which will not exceed Rs.25.
2) Annual holding statement:
One annual holding statement ho holding of the account is sent to the registered address of the account holder. These documents will be send in physical or electronic form i.e. via e-mail as per account holder’s choice.
3) SMS Alert:
Account holder should register his mobile number to get the facility of SMS alert. Here you will get SMS for every transaction in your account.
4) Delivery Instruction Slip (DIS):
Two delivery Instruction Slips will be provided to you for free at the time of opening Basic Services Demat Account.
These are the services which are slightly different in case of Basic Service Demat Account then normal Demat Account. If you want to read more details about the services and charges of BSDA then you can download the circular by SEBI.
Can I convert my current Demat account into BSDA?
Yes, if you feel you are not making much use of your Demat account or if your portfolio is of less size, you can contact your DP to get your Demat converted to basic services Demat account.
This Basic Services Demat Account is a kind of free account because you don’t need to pay any maintenance charge if your transactions are below Rs.50,000. And Rs.100 only if your transactions are between Rs.50,000 to rs.2,00,000.
I hope you get all the basic details about BSDA. Do let us know if you need more details about Basic Service Demat Account…..