What is a BSDA - Basic Services Demat Account?

Over the last few years, the BSDA account has become increasingly popular among beginners, students, and long-term passive investors who invest ₹1,000–₹10,000 at a time. In this article, we will break down what a BSDA is, how it works after the latest 2024–25 SEBI update, who should consider it, what charges apply, and how to open or convert to a BSDA.

In this blog, we will explore BSDA's main features, its benefits, and how it will impact the investment landscape for small investors. Whether you are a novice investor or someone seeking to learn more about cost-effective ways to manage your investments, this blog will be a valuable resource for you.

Coverings:

1. What is a Basic Service Demat Account?
2. Latest SEBI Update in BSDA
3. BSDA Charges Explained
4. What are the Eligibility Criteria for BSDA?
5. Benefits of BSDA
6. Limitations of BSDA
7. How to Open a BSDA Account?
8. BSDA Account vs Regular Demat Account
9. How to Convert Your Regular Demat Account to a BSDA
10. Conclusion
11. FAQs on BSDA

What is a Basic Services Demat Account?

A Basic Services Demat Account (BSDA) is one of the simplest and most affordable ways for small and early-stage investors in India to hold shares, ETFs and mutual fund units in electronic form. SEBI introduced the BSDA framework to reduce the cost of maintaining a Demat account, especially for investors whose total portfolio value is relatively small. With AMC (Annual Maintenance Charge) being one of the highest recurring costs for Demat users, the BSDA structure helps bring AMC down to nearly zero for low-value holdings.

Key features of BSDA:

• You can hold all types of securities—equity, debt, ETFs, REITs, and mutual funds.
• There is no difference in functionality compared to a regular Demat.
• Only the cost structure changes based on your portfolio value.
• It is designed specifically for small or passive investors.

Why did SEBI introduce BSDA?

SEBI introduced the BSDA in 2012 to:

• Lower the cost of participating in the securities market
• Support first-time and small investors
• Reduce the burden of high AMCs charged by brokers (earlier ₹300–₹900 per year)
• Promote wider market participation

Latest SEBI Update in BSDA

This is one of the most important updates for BSDA holders, as SEBI revised the holding slabs and AMC structure in its 2024–25 circular.

The new rules directly impact how much you pay every year for maintaining your Demat account.

Old vs New BSDA Limits

BSDA Rule	Earlier	New (2024–25)
Zero AMC limit	Up to ₹2 lakh	Up to ₹4 lakh
Reduced AMC slab	₹2–₹5 lakh	₹4–₹10 lakh
Normal AMC slab	Above ₹5 lakh	Above ₹10 lakh

Impact on Small & Passive Investors

• More investors now qualify for zero AMC, thanks to the increased threshold.
• SIP-based MF investors benefit because their quarterly valuation often fluctuates, and the ₹4 lakh slab gives more room.
• Many accounts that used to fall in the “reduced AMC” slab will now pay nothing.
• Investors with ₹6–₹9 lakh holdings now pay only ₹100 per year, which is significantly lower than regular AMC charges.

This update makes BSDA even more attractive for beginner and moderate-sized portfolios.

BSDA Charges: What You Need to Pay

One of the key advantages of a Basic Service Demat Account (BSDA) is its cost-effectiveness, designed to encourage small investors as per SEBI’s mandate. The charges are linked directly to the value of securities held in your account, keeping costs minimal for smaller portfolios.

Annual Maintenance Charges (AMC)

The AMC for a BSDA is structured to be very low or even nil for small portfolios, aligning with SEBI's goal to make investing more affordable for retail investors. The following is the updated breakdown as per the latest SEBI guidelines:

Holding Value (Combined securities)	Annual Maintenance Charges (AMC)
Up to ₹4,00,000	Zero AMC
₹4,00,001 to ₹10,00,000	Maximum ₹100 per year (+ GST)
Above ₹10,00,000	Account is no longer classified as BSDA; standard AMC applies (regular Demat)

Want to know what AMC really means and why it’s charged on Demat accounts? Understanding AMC for Demat Account can help you manage your costs better.

Examples:

1. Portfolio Value: ₹3 lakh

• Falls in the 0–₹4 lakh sla
• AMC = ₹0

2. Portfolio Value: ₹7 lakh

• Falls in the ₹4–₹10 lakh slab
• AMC = ₹100

3. Portfolio Value: ₹12 lakh

• Exceeds the BSDA limit
• Your account will be converted into a regular Demat account
• AMC becomes the broker’s standard rate (around ₹300–₹900 per year)

These numerical examples help users understand the BSDA cost index clearly.

BSDA Charges at Popular Brokers

Most brokers follow SEBI’s guidelines for BSDA charges. Here’s a quick look at the charges at some of the most popular brokers:

Broker	Holdings up to ₹4lakh (BSDA)	Holdings ₹4lakhs 1rupee–₹10lakh (BSDA)	Holdings above ₹10lakh/Non-BSDA
Zerodha	₹0 AMC	₹25 per quarter (₹100 per year) + GST	₹75 per quarter (₹300 per year) + GST
Upstox	₹0 AMC	₹100 per year + GST	₹300 per year + GST
Angel One	₹0 AMC	₹100 per year + GST	Regular demat AMC as per non-BSDA
ICICI Direct	₹0 AMC	₹100 per year	Regular demat AMC applies
HDFC Securities	₹0 AMC	₹100 per year	Not eligible for BSDA; regular AMC applies

How to Avoid Surprise Charges

To avoid unexpected fees, keep track of your portfolio value regularly:

• Monitor your portfolio at least monthly.
• Understand your broker’s valuation method (closing price vs. weekly closing price).
• Avoid opening multiple Demat accounts unnecessarily to ensure your BSDA stays intact.

Eligibility Criteria for a Basic Service Demat Account (BSDA)?

To be eligible for a Basic Service Demat Account (BSDA), you must meet specific requirements set by SEBI. Here's a clear breakdown of the key criteria:

1. Residency Status:
   • You must be a Resident Individual. NRIs, HUFs, corporations, and partnerships are not eligible.
2. Single Account:
   • You can only hold one BSDA across all depositories. If you have multiple Demat accounts, only one can be a BSDA.
3. Investment Limit:
   • Zero AMC applies up to ₹4 lakh in portfolio value.
   • Reduced AMC applies for holdings between ₹4 lakh and ₹10 lakh.
   • If your portfolio exceeds ₹10 lakh, your BSDA will convert to a regular Demat account, and standard AMC charges will apply.
4. Ownership:
   • The BSDA must be in your sole name. Joint accounts are not allowed.
5. No Regular Demat Account:
   • You cannot hold a regular Demat account in addition to a BSDA.
6. Valuation Methodology:
   • The holding value is calculated based on the closing prices as per your broker's or DP’s (Depository Participant) valuation methodology.
7. Eligibility Verification:
   • Your broker or DP will verify:
     • If you already have another BSDA.
     • If your PAN is registered with multiple Demat accounts.
     • If you meet the eligibility criteria based on weekly valuation checks (varies by DP).
8. When Eligibility is Lost:
   • You will lose eligibility for a BSDA if:
     • Your holdings exceed ₹10 lakh.
     • You open another Demat account.
     • You convert to NRI status.
     • Your valuation crosses the limit during any valuation cycle.
9. Once Eligibility is Lost:
   • The AMC changes automatically to the standard rate applicable to regular Demat accounts.

Important Notes:

• The earlier investment cap for BSDA was ₹2 lakh; it has now been revised to ₹10 lakh by SEBI.
• If your holdings go beyond ₹10 lakh, the account automatically transitions to a regular Demat account, and you will be subject to standard AMC charges.

Benefits of BSDA

Here’s a breakdown of the key benefits of a Basic Services Demat Account (BSDA):

1. Cost-Effective: BSDAs provide significant fee reductions, especially for smaller investors. Annual Maintenance Charges (AMCs) are often waived if the value of your holdings remains below ₹10 lakh, making it an affordable choice, particularly for beginners.
2. Simpler Features: BSDAs are designed with streamlined features, making them ideal for new investors who are just starting out and don’t need all the advanced functionalities of a regular Demat account.
3. Reduced Paperwork: BSDA statements are typically delivered electronically, helping you avoid physical copies and promoting a more paperless investing experience.
4. Encourages Gradual Investment: With lower fees and a focus on smaller portfolios, BSDAs are great for investors who wish to start with caution and build their portfolio gradually over time.
5. Easy Upgrade Path: As your knowledge and investment portfolio grow, your BSDA can seamlessly convert into a regular Demat account, giving you access to more features without the hassle of opening a new account.

Ultimately, BSDAs offer a welcoming gateway to the securities market, catering to the needs of both new and cautious investors who prefer simplicity and cost-effectiveness.

The Limitations of BSDA

While a BSDA offers a range of benefits for small investors, it does have certain limitations that make it unsuitable for others. Here’s a breakdown of when you might want to consider a regular Demat account instead:

1. You Plan to Invest More Than ₹10 Lakh: The most significant limitation is the holding value cap. If your portfolio grows beyond ₹10 lakh, your BSDA will be automatically converted into a regular Demat account. Once converted, you will be required to pay higher charges than those applicable to a BSDA.
2. You Are an Active Trader: BSDAs are designed for basic investing needs, making them ideal for long-term investors. Active traders who need advanced features, such as margin facilities, high-frequency trading platforms, or additional research tools, will find a regular Demat account more suitable.
3. You Want to Hold Multiple Demat Accounts: SEBI guidelines allow you to hold only one BSDA. If you plan on maintaining multiple Demat accounts for different investment strategies—such as one for long-term holdings and one for active trading—you won’t be able to do so with a BSDA.

In summary, BSDAs are great for smaller, more cautious investors, but if you’re planning to invest larger sums, trade actively, or require multiple accounts, you may want to consider a regular Demat account.

Who Should Open a BSDA?

Here are some common scenarios where a BSDA is a great fit:

1. Beginners Investing Under ₹10 Lakh: If you’re new to investing or starting with SIPs or small equity purchases, a BSDA helps keep your costs low while you learn the ropes.
2. Students and Part-Time Investors: BSDA is ideal for those who invest casually or on a small scale, as it keeps annual fees to a minimum.
3. Long-Term Passive Holders: If you mainly invest in mutual funds or ETFs with long-term horizons, BSDA is a cost-efficient choice.
4. Users Wanting to Avoid High AMC Fees: If you want predictable, low-maintenance costs, a BSDA provides excellent value, especially if you don’t need the extra features of a regular Demat account.

Who Should Avoid BSDA?

A BSDA might not be suitable for:

• Active traders who need advanced features and margin facilities.
• High-value investors whose portfolios exceed the BSDA limit.
• Derivatives traders who require margin accounts.

How to Open a BSDA Account?

Opening a Basic Service Demat Account (BSDA) is a simple and straightforward process, similar to opening a regular Demat account. Here's a step-by-step guide:

Step 1: Choose a Depository Participant (DP)
Start by selecting a reputable brokerage firm or bank that offers BSDA accounts. Many major brokers support BSDA by default, but it’s always a good idea to research and choose one that suits your needs.

Step 2: Check Eligibility
Make sure you meet the BSDA eligibility criteria, including:

• You can only have one BSDA across all brokers.
• You must be the sole owner of the account (joint accounts are not allowed).
• You cannot hold any other Demat accounts linked to the same PAN.

Step 3: Account Opening Process
Once you've chosen a broker, follow their account opening process. This is usually available online or offline. You’ll need to submit the necessary documents, such as:

• PAN card
• Aadhaar card
• Bank account proof
• Photograph
  Additionally, you will need to complete the KYC (Know Your Customer) procedure, which may include an eSign verification.

Step 4: Broker Verification
Your broker will verify:

• Whether you already hold a BSDA elsewhere.
• If you meet the eligibility criteria (such as holding value limits and account ownership).

Step 5: Account Activation
Once everything is verified, your BSDA account will be activated. Most brokers typically complete the process within 24–48 hours, and you will receive your login credentials to start investing!

If you're unsure about how a demat account works or how to set it up, this Demat Account opening guide will walk you through each step in detail.

BSDA Account vs Regular Demat Account

Feature	Basic Service Demat Account (BSDA)	Regular Demat Account
Primary User	Ideal for beginner investors, students, and individuals with small portfolios.	Best suited for active traders, long-term investors, and high-net-worth individuals.
AMC (Up to ₹50,000)	Nil (Zero)	Varies (Typically ₹300 - ₹800 per year)
AMC (₹50k - ₹2 Lakh)	Maximum ₹100 + GST per year	Varies (Typically ₹300 - ₹800 per year)
Holding Value Limit	Must be below ₹10,00,000 (Revised cap from ₹2 Lakh).	No upper limit on the value of holdings.
Single Account Rule	Only one BSDA can be held across all depositories.	Multiple regular Demat accounts can be held.
Statement of Account	Physical statements are free of cost.	Charges may apply for physical statements.
Ideal For	Passive, long-term investors who prefer to buy and hold small quantities.	Frequent traders and investors dealing with large volumes or needing advanced features.

When the Account Becomes a Regular Account Automatically

Your BSDA becomes a regular Demat if:

• Your total valuation exceeds ₹10 lakh
• You open more than one Demat account
• You become ineligible as per the SEBI criteria

This conversion is automatic and does not require your instruction.

How to Convert Your Regular Demat Account to a BSDA

If you currently have a regular Demat account and your portfolio value is below ₹10 lakh, you can easily convert it to a Basic Service Demat Account (BSDA) to save on costs. Here’s how:

Step 1: Ensure Eligibility
First, make sure that:

• You don’t already hold any other BSDA accounts.
• The total value of your holdings in the account you wish to convert is below ₹10 lakh (SEBI revised this limit from ₹2 lakh to ₹10 lakh).

Step 2: Contact Your Depository Participant (DP)
Reach out to your broker or DP (such as Zerodha, Upstox, HDFC Securities, etc.) and request the conversion form to change your regular Demat account into a BSDA.

Step 3: Submit the Conversion Form
Fill out the conversion form with the required details and submit it to your DP. Ensure all the information is accurate to avoid delays.

Step 4: Verification and Conversion
Your broker or DP will verify your eligibility and holdings. Once verified, they will convert your account to a BSDA. After the conversion, you will receive confirmation, and the new, lower charge structure will apply.

Additional Points:

• Most brokers process the conversion within 2–5 working days.
• If your account is automatically reclassified to BSDA during an annual review (due to a decrease in the portfolio value), you’ll be notified by your DP.
• In case the conversion is rejected, it could be due to:
  • Holdings exceeding ₹10 lakh.
  • Having another BSDA account under the same PAN.
  • Mismatched PAN details or incomplete KYC.

When Does a BSDA Get Converted to a Regular Demat Automatically?

This is a common question among investors, and it's important to know the key triggers for automatic conversion:

1. Portfolio Value Crosses ₹10 Lakh
   The most common reason for automatic conversion is when your portfolio value exceeds ₹10 lakh. At this point, your BSDA will be converted to a regular Demat account, and you’ll be subject to the standard AMC charges.
2. You Open Another Demat Account
   A BSDA is allowed for only one account per PAN. If you open a second Demat account, you’ll lose your BSDA eligibility, and your existing BSDA may convert to a regular account.
3. Change in Status
   If your residency status changes (e.g., you become an NRI), you’ll no longer be eligible for a BSDA, and your account will be converted accordingly.
4. Violation of Portfolio Restrictions
   If the Depository Participant (DP) detects any irregularities during valuation cycles—for example, if your portfolio value fluctuates above the allowed limit or doesn't meet eligibility—the account may be reclassified.

Conclusion

In conclusion, the Basic Service Demat Account (BSDA) is an excellent choice for novice and cautious investors, providing a low-cost entry into the world of investing. By lowering annual maintenance charges (AMC) and offering a simplified set of features, BSDA helps make investing more accessible, especially for those who are just starting out or prefer a simpler approach.

SEBI’s recent revision of the BSDA investment cap to ₹10 lakh further strengthens the appeal of this account, making it an even more inclusive option for small investors. This move reflects a broader effort to ensure that financial growth and participation in the stock market are open to all, regardless of portfolio size.

In short, the BSDA is more than just a basic account—it’s a gateway to financial inclusion, offering newcomers an opportunity to build wealth without the burden of high costs. Whether you’re just beginning your investment journey or looking to keep things simple, BSDA is an ideal choice.

Not sure whether to stick to one account or add another? Learn how Multiple Demat Accounts can fit into your investment journey.

FAQs

1. What is a BSDA Account?
   A BSDA (Basic Services Demat Account) is a type of Demat account designed for small investors with limited portfolios. It was introduced by SEBI in 2012 to reduce the burden of demat charges forretail investors, encouraging participation in the stock market.
    
2. What is the new BSDA limit?
   The new BSDA investment limit is ₹10 lakh, effective from 1 September 2024. This update, which raised the previous limit of ₹2 lakh, allows more flexibility for small investors to maintain a BSDA.
    
3. Can I have multiple BSDA accounts?
   No, an individual can only hold one BSDA account across all depository participants (DPs). If you already have a BSDA with one DP, you cannot open another with a different DP.
    
4. How can I check if my account is a BSDA?
   To confirm if your account is a BSDA, check the following:

• Holding Value: If the value of your holdings is below ₹10 lakh (as per the new SEBI limit), it's likely a BSDA.
• AMC Charges: BSDA accounts generally have lower AMC fees compared to regular Demat accounts.
• Contact Your DP: You can always reach out to your Depository Participant for confirmation.

5. What happens if my BSDA exceeds the limit?
   If the value of your holdings exceeds ₹10 lakh, your BSDA will be automatically converted to a regular Demat account, and standard AMC charges will apply from the date of conversion.
    
6. Is BSDA suitable for active traders?
   A BSDA is not recommended for active traders. If you have a larger portfolio or require advanced features (such as margin facilities or extensive trading options), a regular Demat account will be a better choice.
    
7. Can I convert my BSDA to a regular Demat account?
   Yes, a BSDA can be converted to a regular Demat account. This conversion can either be requested or happen automatically when your holdings exceed ₹10 lakh.
    
8. Can NRIs open a BSDA?
   No, BSDA accounts are only available to resident individuals. NRIs cannot open BSDA accounts.
    
9. Is BSDA safe?
   Yes, a BSDA uses the same security framework as regular Demat accounts, ensuring your securities are well protected.
    
10. Is BSDA good for beginners?
    Yes, BSDA is ideal for beginners due to its low AMC and simple structure, making it a great option for new investors or those with small portfolios.
     
11. Does BSDA affect trading?
    No, a BSDA account offers the same trading facilities as a regular Demat account, with no restrictions on buying and selling securities.
     
12. Are mutual fund holdings included in BSDA?
    Yes, mutual fund units held in Demat form are included in the BSDA valuation, so they count towards the ₹10 lakh limit.
     
13. Can I close a BSDA account online?
    Yes, most brokers allow you to close your BSDA account online through their portals.
     

14. Who is BSDA designed for?
    The current design focuses on investors with holdings up to ₹10 lakh. Above that, the benefits no longer apply and the account becomes a regular Demat.