Last year, SEBI introduced the “no-frills” demat a/c, also known as BSDA-Basic services demat account. This was a result of the concerns and suggestions by the small time investors who had been paying a high annual service charge on their demat a/c even though they rarely traded and had opened a demat a/c with the purpose of investing in some of the good initial public offers. Let us understand the features, benefits over and above the normal demat a/c and the eligibility criteria.
- The BSDA has no annual maintenance charges if the value of securities held in the account is less than Rs. 50,000/-, and a nominal Rs. 100 if it is between Rs. 50,000 – Rs. 2 Lakhs. Compare this to the mandatory annual maintenance charges of around Rs. 750 which the account holder has to pay for the normal a/c, even if his holding value is minimal. The no-frills demat a/c holders will get only a quarterly statement , that too if there are any transactions in the a/c.
- If the value of holdings in the BSDA exceeds Rs. 2 Lakhs, it will be treated and charged like a normal demat a/c.
- This a/c is beneficial for the small time investors , infrequent traders, and and those who invest only in IPOs and NFOs, as investing through the demat route requires minimal paperwork and it is more convenient to hold the investments in the electronic form.
- Exisiting demat a/cs with a balance of less than Rs. 2 lakhs worth of securities, and those which are near dormant can be converted in to a BSDA. According to an analysis, around 60% of the existing demat accounts will fall under this category.
- One person can hold only one no-frills demat a/c in his name. Opening multiple accounts with different repositories is not allowed.