Sebi mulling to review facility for Basic Services Demat Account to improve financial inclusion

New Delhi: Sebi on Monday proposed changes to the ‘Basic Services Demat Account’ (BSDA) framework to enhance financial inclusion, including excluding Zero Coupon Zero Principal (ZCZP) bonds from the portfolio value used to determine BSDA eligibility.

In its consultation paper, the regulator said the move would support ease of investment and ease of doing business. BSDA, introduced in 2012, reduces demat charges for small investors.

Sebi said ZCZP bonds differ from conventional demat securities as they are non-transferable, non-tradable and offer no return or redemption value. Their economic nature is closer to a social contribution than an investment asset. Including them in an investor’s portfolio value can artificially inflate holdings and make the investor ineligible for BSDA benefits. Sebi has therefore proposed that ZCZP bonds be excluded from BSDA valuation.

The regulator also suggested treating delisted securities the same as suspended ones, since both lack liquidity and price discovery. Excluding delisted securities would ensure fairness for investors whose holdings do not reflect realizable value.

For illiquid securities, Sebi recommended using the last closing price for BSDA calculations, as they remain listed and tradeable through specific mechanisms. To simplify processes for depository participants (DPs), Sebi proposed quarterly reassessment of BSDA eligibility through a system-driven approach across all DPs.

It also suggested broadening the modes through which beneficial owners can give consent, allowing authenticated digital methods beyond the registered email. Public comments on the proposals are open until December 15.