How to Convert Demat to BSDA?

To invest in the stock market, you must have a demat account. Without a demat account, you will be unable to buy or sell shares on the stock exchange. You can currently open a conventional demat account or a BSDA account, which are the two types of demat accounts available.

While both of these account types serve the same purpose, there are some differences between them. This article contains all the information you require on BSDA demat accounts and how to change your current account to a BSDA account.

What is a Basic Service DEMAT Account?

The Securities and Exchange Board of India (SEBI) introduced the Basic Service Demat Account (BSDA), a new demat account variation, in 2012. Small and infrequent investors with a total portfolio value under ₹2 lakhs are the target market for the BSDA account, which is designed to be an affordable option to keep assets electronically.

The market regulator proposed the concept of a basic Demat account in order to encourage financial inclusion and level the playing field for small investors. In essence, a basic services Demat account is a straightforward one, with yearly maintenance fees that vary based on the holdings' value.

Benefits of BSDA

A BSDA account has various advantages over a standard Demat account. Here is a brief synopsis of some of them.

1. Adjustable Annual Maintenance Fees: The fact that the Annual Maintenance Charges, or AMC, are determined by the value of your holdings is one of the main benefits of the Basic Service Demat Account. If the entire value of the securities held on a BSDA account is less than ₹50,000, the AMC will not be charged.
However, you will only be required to pay an AMC of ₹100 + GST if the total value of the securities is between ₹50,001 and ₹2 lakhs. This is far less than what would be required for a standard account.
2. Zero Dematerialisation Fees: If you have a standard demat account, you will be charged for the dematerialisation of securities. The price per share certificate might range from ₹10 to ₹50. Nevertheless, there are absolutely no fees associated with the dematerialization of securities when using a BSDA account.
3. Ability to Select the Holding Statement Delivery Mode: If you have a BSDA demat account, you have the option of receiving your yearly holding statement in soft copy or hard copy. When you open a demat account, you specify the address to which physical copies are distributed.

What are the Eligibility Criteria for BSDA?

Although there are a number of advantages to BSDA, opening a Basic Service Demat Account requires meeting specific requirements. The factors to be considered are listed here.
 
1. The account should belong to the investor alone.
2. No other Demat accounts should be held by the investor.
3. Under the BSDA category, a single Demat account may be maintained.
4. At no time should the total value of the BSDA shares surpass Rs. 2 lakh.
5. The investor shouldn't be the account's primary holder if they have a joint account.

What are the Eligible Limits for the BSDA Account?

SEBI guidelines state that securities kept in a BSDA account should not be worth more than ₹2 lakh. Regular Demat charges will be incurred if the security value in your account surpasses the ₹2 lakh limit. For instance, the securities you purchased for ₹1.50 lakh have now increased in value to ₹2.30 lakh. The standard broking fees will be applicable in this situation.

Depository Participants (DP) are required by SEBI to open BSDA accounts with restricted services and lower fees. They are unable to deny you a BSDA account as long as it meets the requirements for eligibility.

How do I convert my Demat Account to a BSDA Account?

Only under specific circumstances can an existing Demat account be converted to a BSDA account. The authority to check with depositories belongs to the regulator. The depository will use its authority to change the Demat account to a BSDA if appropriate. After that, the regulator will convert your account to a BSDA account. 

For your present Demat Account to be converted to BDSA, it is crucial that you have no other Demat Accounts. AMC will be billed in accordance with the highest value of your holding. Your BSDA account will be changed to a non-BSDA account, nonetheless, if your holding value exceeds the threshold or if you currently have an active Demat Account with another broker.

What are the Conditions for BSDA Accounts Stipulated by SEBI?

If the entire value of the securities on a BSDA account is less than ₹50,000, DPs are not permitted to charge an AMC fee.

DPs are permitted to impose an annual AMC fee of more than ₹100 for holding values between ₹50,001 and ₹2,00,000.

Charges that apply to a non-BSDA account may be applied by the DP if the holding value above ₹2,00,000 at any point during the year.
 

Conclusion

An existing Demat account being converted to a basic service A demat account can significantly lower the investment's total cost. In addition to the price, you should consider the services the stockbroker offers and pick one that works for you. You can track your transactions and manage your investments more conveniently by using a demat account app.