Process for Converting your Demat Account into a BSDA Account
A demat account is mandatory to invest in the stock market. You cannot purchase or sell shares through the stock exchange without it. There are currently two kinds of demat accounts that you can open - a regular demat account and a BSDA account.
Although the function of both of these types of accounts remains the same, they do differ from each other in a few ways. Here’s everything you need to know about the BSDA demat account and how to convert your existing account to a BSDA account.
What is a BSDA Account?
In 2012, the Securities and Exchange Board of India (SEBI) launched a new variant of the demat account known as the Basic Service Demat Account (BSDA). The BSDA account is meant to be a cost-effective way to hold securities electronically and is aimed at small and infrequent investors with a total portfolio value of less than ₹2 lakhs.
Benefits of a BSDA Demat Account
Compared to a regular Demat account, a BSDA account offers several benefits. Here’s a quick overview of a few of them.
Flexible Annual Maintenance ChargesOne of the major advantages of the Basic Service Demat Account is that the AMC or Annual Maintenance Charges are levied based on the value of your holdings. The AMC will not be levied on a BSDA account if the total value of the securities held is less than ₹50,000.
However, if the total value of the securities is between ₹50,001 and ₹2 lakhs, you will only have to pay an AMC of ₹100 + GST, which is far lower than that of a regular account.
Zero Charges for DematerialisationYou will have to pay a charge for the dematerialisation of securities if you possess a regular demat account. This charge can be anywhere from ₹10 to ₹50 per share certificate. However, with a BSDA account, no charges are levied for the dematerialisation of securities at all.
Ability to Choose the Holding Statement Delivery ModeIf you have a BSDA demat account, you can choose to either get a physical copy or a soft copy of your annual holding statement. Physical copies are sent to the address specified by you at the time of opening a demat account.
How to Convert a Regular Demat Account to a BSDA Demat Account
If you’re a long-term investor who rarely purchases or sells securities, you may opt to convert your regular demat account into a BSDA. All you need to do is place a formal request for conversion with your Depository Participant (DP). However, before you place a request for conversion, you need to first ensure that you satisfy the following conditions.
- You must be the first holder or the sole holder of the demat account you wish to convert.
- You shouldn’t already have another demat account (BSDA or otherwise) in your name.
- Your total value of securities in your demat account must be less than ₹2 lakhs.
Once you’ve ensured that you’ve satisfied all the above conditions, you can proceed to convert your account. The process involves sending a duly filled demat account modification form along with a BSDA declaration form to your Depository Participant. Once the forms are received by your DP, the account conversion should be complete within a few working days. That said, the conversion process may vary slightly depending on the DP you’re associated with.
As you can see, BSDA demat account charges are very low compared to that of a regular account. Therefore, if you don’t invest or sell securities frequently and have a portfolio value of less than ₹2 lakhs, you may consider converting your regular demat account to a BSDA.
If high account charges are something that’s worrying you, you can consider opening a trading and demat account with m.Stock. You not only get to enjoy zero AMC charges for life but also zero brokerage on trades across segments.