Basic Services Demat Account

A demat account is not just for equities but also for mutual fund, bonds, debentures, nationals savings certificate and soon insurance policies! So having a demat account is necessary for each one of us. However, the Depository Participants (DP) who actually maintain our demat account charge us a  maintenance fees from anywhere between Rs.400-Rs.1000 per annum. 

But as noted increasingly demat account is becoming a necessity than luxury. So to promote small retail investors, SEBI came up with the concept of "Basic Services Demat Account" (BSDA) modelled on the lines of no frills savings bank account mandated by RBI.

So the good news is that if your total investments (including equities and mutual funds etc.) have not crossed Rs.50,000, then you are not liable
to pay any Annual Maintenance Charges to your DP. And a marginal fee of Rs.100 is levied if your investments is less than Rs.2 lakhs. This comes under the light of a SEBI circular mandating all DPs to provide a "Basic Services Demat Account" (BSDA) effective from Oct 1st, 2012. 

Quoting SEBI's press release PR No. 79/2012 dated Aug 27th 2012 (Ref: www.sebi.gov.in/cms/sebi_data/pdffiles/24288_t.pdf) - "With a view to achieve wider financial inclusion, encourage holding of demat accounts and to reduce the cost of maintaining securities in demat accounts for retail individual investors, SEBI has decided that all depository participants (DPs) shall make available a "Basic Services Demat Account" (BSDA) with limited services and reduced costs.".

SEBI circular CIR/MRD/DP/22/2012 dated Aug 27th 2012 (Ref: www.sebi.gov.in/cms/sebi_data/attachdocs/1346068674662.pdf) says and I quote "The DP shall give option: To all the existing eligible individuals to convert their demat account into BSDA on the date of the next billing cycle based on value of holding of securities in the account as on the last day of previous billing cycle." Further the CIR says "The circular shall be applicable with effect from October 01, 2012." Please refer this circular to understand the eligibility criteria.

To understand the entire situation and why SEBI intervened, please refer this article "Are your demat charges high? Check how to reduce them" available here.