With the introduction of BSDA (Basic Services Demat Account) now small individual investors can open and maintain demat account for trading in securities market of India without or small annual maintenance charge. Induction of BSDA is a result of market regulator SEBI’s effort to make large number of individual investors to invest in the Indian stock market.
From October 01, 2012, all the depository participants started offering BSDA account to individual investors to make them invest in securities market. BSDA account is introduced for small investors so the investment limit decided by SEBI is Rs 2 lakhs. Which means any investment upto Rs 2 lakhs will attract either no or small amount as maintenance charge on this account.
As we all know, demat account is used to trade in securities market like purchase of shares, mutual funds etc. and to keep them in dematerialized form. So using this demat account you an an retail individual investor can invest any thing upto Rs 2 lakhs then there may be no or small maintenance charge.
Although there is no restriction on the investment amount, but if you make investment above Rs 2 lakhs then normal maintenance charge will be levied on your account from that date onwards. Even if you hold a normal demat account and your investment value is less than Rs 2 lakhs then you can convert your account to BSDA i.e no frills account.
The value of your holdings is determined on the basis of NAV of the securities.
You may get lesser services on BSDA account as compare to normal demat account but you can get electronic statements of your transactions from your depository participant free of cost. Apart from electronic statement, you can also get two physical statements free of cost during the billing cycle. SMS alert facility will also be available to the investors on making debit card transaction using mobile phone.
An individual investor is allowed to maintain only one BSDA account across all depositories. The annual maintenance charges (AMC) structure for BSDA is designed on a slab basis. If the value of holding is up to Rs.50,000, there will be no AMC and for Rs.50,001-200,000, the AMC will be up to Rs.100.
The investors would also get SMS alert facility for all debit transactions on these accounts through their mobile phones. All individuals, who propose to have only one demat account and those who have accounts where the person is not the first holder, would be eligible for BSDA.