Sebi eases BSDA rules, excludes ZCZP bonds, delisted stocks from account valuation

Synopsis

Sebi is making demat accounts simpler for investors. Zero Coupon Zero Principal bonds and delisted securities will no longer count towards the value limit for Basic Services Demat Accounts. This change aims to ease investing and reduce compliance burdens. These new rules will be effective from March 31, 2026.

To further enhance the Basic Services Demat Account (BSDA) framework, markets regulator Sebi on Wednesday decided to exclude Zero Coupon Zero Principal (ZCZP) bonds and delisted securities from the valuation threshold used to determine BSDA eligibility.

The move is aimed at further improving BSDA facility to make investing simpler for investors and reduce the compliance burden for depository participants (DPs).

"It has been decided to exclude Zero Coupon Zero Principal (ZCZP) bonds and delisted securities for reckoning the threshold for BSDA," Sebi said in its circular.

This means that the value of these securities will not be counted while checking BSDA eligibility.

This decision follows feedback received from market participants after the earlier circular issued on June 28, 2024.

For illiquid securities, DPs will calculate the account value using the last available closing price. In addition, DPs are now required to review the BSDA eligibility of all accounts every quarter, instead of doing it occasionally.

The regulator has also mandated that if an investor is eligible for BSDA, the DP is required to open or convert the account into BSDA by default.

If the investor wants to keep a regular demat account instead, they are required to provide their active consent through a verifiable and authenticated channel prescribed by the depositories.

Further, DPs will have to reassess all existing demat accounts every quarter and convert all eligible accounts into BSDA unless the investor specifically consents to continue with a regular demat account.

For valuation purposes, the value of holdings will be based on daily closing prices or NAVs. If prices are not available, the last traded price may be used.

For unlisted securities other than mutual fund units, face value can be considered. For illiquid securities, last closing price will be used.

However, the value of suspended securities, delisted securities and ZCZP bonds will not be considered at all while determining BSDA eligibility.

These changes will come into effect from March 31, 2026, Sebi said.

A basic service demat account, or BSDA, is a more basic version of a regular demat account. The value of holdings in the BSDA should be below Rs 10 lakh. The facility was introduced by Sebi in 2012 for reducing the burden of demat charges on investors with small portfolios.

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