Sebi to review Basic Services Demat Account: From ZCZP bonds to digital consent — Here’s what could change

The Securities and Exchange Board of India (SEBI) has on 24 November proposed changes to the Basic Services Demat Account facility, with aim to improve ease of doing business and improve financial inclusion across India.

The markets regulator in a circular on Monday titled ‘Ease of investments and ease of doing business measures – Review of the ‘Facility for Basic Services Demat Account (BSDA) for Financial Inclusion’ made a host of proposals in its consultation paper.

What is BSDA facility for investors?

Basic Services Demat Account facility or BSDA is a “special category” or more stripped-down version of a usual demat account. Introduced in 2012, the facility allows investors with small portfolios to trade on reduced demat charges.

According to SEBI, if the stock holdings in a BSDA are less than ₹50,000, the annual maintenance charges are waived. These charges can range from ₹100-1,000, plus GST charges imposed by private brokerage firms.

Notably, public comments on the proposals are invited till December 15.

What are the changes SEBI is proposing?

Among some of the changes to its Basic Services Demat Account facility, SEBI has suggested that Zero Coupon Zero Principal (ZCZP) bonds be excluded from the portfolio value calculation to determine BSDA eligibility; treating delisted securities on par with suspended securities; trading mechanism for illiquid securities; and eligibility of existing beneficial owners.

SEBI on ZCZP bonds

As per the consultation paper, SEBI feels that ZCZP bonds are “fundamentally distinct from conventional securities held in a demat account, because they are non-transferable, non-tradable, and do not provide any monetary return or redemption value to the holder”.

“Their economic value is closer to a social contribution or donation made by the investor rather than an investment asset capable of appreciation, liquidation, or portfolio enhancement. Since BSDA eligibility is based on the realizable value of an investor’s holdings, counting ZCZP bonds, whose value cannot be encashed or traded, may artificially inflate a portfolio and make an investor ineligible for BSDA benefits,” it added.

Thus, under consideration is that ZCZP bonds be excluded while calculating the value of holding for the purpose of determining eligibility of demat accounts as BSDA.

Treatment of delisted securities

Further, on the treatment of delisted securities, the regulator has proposed that they be placed on par with suspended securities, as both “lack active trading, liquidity, and transparent price discovery”.

“Excluding delisted securities from BSDA valuation similar to the treatment of suspended securities would ensure consistency and maintain fairness for the investors whose holdings do not represent realizable market value,” it added.

Illiquid securities to be included in BSDA

With respect to illiquid securities, SEBI noted that these are not actively traded but continue to remain listed and are traded on stock exchange platform through a specific mechanism.

It proposed that illiquid securities “may be considered for the purpose of determining BSDA eligibility. It is further proposed to clarify that the above criteria related to valuation of securities for the purpose of determining BSDA eligibility shall not be applicable for promotor individuals.”

Promoting ease of doing business

The consultation paper noted that the billing cycle may vary across Depository Participants (DPs), which could become cumbersome and impractical.

It has thus proposed that DPs may reassess the eligibility of existing BOs for BSDA and convert the eligible accounts into BSDA on a quarterly basis, in order “to ensure consistent, system-driven reassessment across all DPs, to provide ease of doing business and operational convenience to the depositories and DPs, as per joint representation made by the depositories.”

Further, for improved improve investor experience, it proposed that consent shall be allowed through email from registered email-id and other authenticated means as well.

How to submit comments?

• SEBI has invited comments and suggestions on its consultation paper to be submitted latest by December 15, 2025.
• You can do so through this link: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes20
• In case you face technical issues, email consultationMIRSD@sebi.gov.in
• The subject will be: On “Ease of investments and ease of doing business measures –Review of the Facility for Basic Services Demat Account (BSDA) for Financial Inclusion.”