Demat Account: What is Basic Services Demat Account and what are its features?

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Demat accounts serve as a crucial gateway to stock investing, enabling individuals to access various financial instruments and trade to capitalise on market movements. Similar to a bank account, a demat account securely holds your securities in electronic form, offering convenience and protection by eliminating the need for physical share certificates.

Opening a demat account has become increasingly convenient, with the process streamlined to allow for quick setup via mobile devices, enabling investors to start trading within a day.

In addition to standard demat accounts, there is another category tailored for retail investors known as Basic Services Demat Accounts (BSDA). This account type is specifically designed for small investors who engage less frequently in stock market activities.

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Depository participants or stockbrokers do not offer BSDA accounts separately. Instead, if an individual's stock holdings in their demat account are below ₹2,00,000 and they hold only one demat account registered with a PAN across different depository participants, that account is considered a BSDA.

Only one account can be opened or held under the BSDA category by an investor as the first or sole holder. Additionally, this first or sole holder should not possess any other demat account across depositories, and the value of securities held in the demat account must not exceed ₹two lakh at any point in time.

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The Securities & Exchange Board of India (SEBI) introduced BSDA or Basic Service Demat Account, as a special type of demat account in 2012, catering to eligible Indian citizens.

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