Explained: What is Basic Demat Account charges, Sebi rule, investment limit

All you need to know about different kinds of demat accounts; eligibility criteria, investment limit, charges and Sebi regulations.

In its bid to further boost participation in the equity market and promote ease of doing investments, the market regulator, the Securities and Exchange Board of India (Sebi) on Friday announced comprehensive changes in norms related to a Basic Service Demat Account (BSDA).

Twelve years after its introduction in the year 2012, Sebi on June 30, 2024, not only increased the investment limit for the Basic Service Demat Account, but also reviewed the annual maintenance charges and eligibility criteria.

The new guidelines will come into effect from September 01, 2024.

Here’s all you need to know about what is a basic service demat account, the difference when compared with a regular demat account, the charges, eligibility criteria, investment threshold and norms related to it.

 

What is a Basic Service Demat Account?

A Basic Service Demat Account just like a normal Demat account helps investors to hold equity shares/ other securities investments such as – bonds, mutual funds, exchange traded funds (ETFs)  in an electronic format. It is also commonly known as a Dematerialised account. 

The key difference between BSDA and a regular demat account, is that the former is a more basic version of the latter. This facility was introduced by Sebi primarily to reduce the burden of demat charges on small retail investors.

What is the eligibility criterion for BSDA?

Any individual who has only one demat account, with his/ her name as the first holder  and where the value of investments, in debt and equity, does not exceed Rs 10 lakh is eligible to be qualified as a BSDA account holder.

The earlier investment capping was Rs 2 lakh for BSDA; Sebi has now revised this limit by 5-fold.

What happens if the investment value crosses Rs 10 lakh?

As and when the value of securities in the portfolio (BSDA) crosses the Rs 10 lakh threshold, the account shall automatically be converted into a regular demat account.

Sebi has mandated Depository Participants (DPs) to review all demat accounts at the end of each billing cycle.

 

What happens to my existing demat account?

As per Sebi directive, DPs have been asked to convert existing eligible demat accounts to BSDA within two months unless the account holder opts to keep their regular demat account via email. 

So in case, your portfolio value stands below Rs 10 lakh as of date, your demat account will be classified as BSDA; else remain a regular demat account.

What is the Annual Maintenance Charges (AMC) for BSDA?

There will be NIL AMC charges for BSDA with investments up to Rs 4 lakh; this limit has been revised upwards from the existing cap of Rs 2 lakh. For investment value above Rs 4 lakh and up to Rs 10 lakh; a fixed fee of Rs 100 will be charged as AMC.

Can I get physical statements for my BSDA?

Yes. Account holders can place a request for physical statement. Sebi has notified a fee of Rs 25 per statement. However, all digital statements will be Free of Cost.