Demat accounts serve as a crucial gateway to stock investing, enabling individuals to access various financial instruments and trade to capitalise on market movements. Similar to a bank account, a demat account securely holds your securities in electronic form, offering convenience and protection by eliminating the need for physical share certificates.
Opening a demat account has become increasingly convenient, with the process streamlined to allow for quick setup via mobile devices, enabling investors to start trading within a day.
In addition to standard demat accounts, there is another category tailored for retail investors known as Basic Services Demat Accounts (BSDA). This account type is specifically designed for small investors who engage less frequently in stock market activities.
Also Read: Demat Account: Benefits of handling mutual fund investments through demat
How to open a BSDA account
Depository participants or stockbrokers do not offer BSDA accounts separately. Instead, if an individual’s stock holdings in their demat account are below ₹2,00,000 and they hold only one demat account registered with a PAN across different depository participants, that account is considered a BSDA.
Only one account can be opened or held under the BSDA category by an investor as the first or sole holder. Additionally, this first or sole holder should not possess any other demat account across depositories, and the value of securities held in the demat account must not exceed ₹two lakh at any point in time.
Also Read: Demat Account: How to benefit from corporate announcements?
The Securities & Exchange Board of India (SEBI) introduced BSDA or Basic Service Demat Account, as a special type of demat account in 2012, catering to eligible Indian citizens.
Low annual maintenance charges on BSDA
Many brokerage firms in India levy an annual maintenance fee on demat accounts, which is deducted directly from the account balance. Notifications regarding this deduction are typically sent via email or message once the amount has been debited.
The annual maintenance charges (AMC) vary among depository participant. Generally ranging from ₹100 to ₹1000, the AMC is influenced by factors such as the type of account and the participant’s policies.
Also Read: Demat Accounts: How to operate them through mobile apps?
For instance, Zerodha, a leading discount brokerage firm, charges individuals, HUFs, and partnership firms an AMC of ₹300 plus 18% GST, while corporations such as LLPs and private and public companies may incur an AMC of ₹1,000 plus 18% GST, as per the company’s website.
According to SEBI, if the stock holdings in a BSDA are less than ₹50,000, the annual maintenance charges are waived.
FAQs
What is a ‘Basic Services Demat Account’ (BSDA)?
BSDA is a special category of demat account exclusively available for individual investors.
Is registration for the SMS alerts (SMART) facility mandatory for BSDA category accounts?
Yes, SMART registration is mandatory for BSDA accounts.
How will I know that my DP has updated my account after each transaction?
You will receive periodic account statements displaying transactions and balances, enabling you to monitor your account activity. Additionally, you can utilise services like SMS alerts, IDeAS, and the mobile app for real-time updates.
Can I open more than one demat account?
Yes, you can open multiple accounts with the same DP. There are no restrictions on the number of accounts you can hold with a single DP.
What will happen if my DP goes bankrupt or ceases operations?
In the unlikely event of your DP going bankrupt or ceasing operations, the interests of demat account holders are fully safeguarded. You will be provided with the option to transfer your balances to another DP of your choice or rematerialise the same.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
More
Less
Published: 22 Apr 2024, 04:47 PM IST