Basic Services Demat Account

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. 

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 or with a stock broking companies 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 accounts 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.