SEBI Eases BSDA Rules, Excludes ZCZP Bonds and Delisted Stocks from Valuation
SEBI has announced comprehensive reforms to the Basic Services Demat Account framework, excluding Zero Coupon Zero Principal bonds and delisted securities from valuation thresholds. The new rules mandate quarterly eligibility reviews by depository participants and automatic conversion to BSDA for eligible accounts, with implementation scheduled for March 31, 2026.
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Markets regulator SEBI has announced comprehensive changes to the Basic Services Demat Account (BSDA) framework, aimed at making investing more accessible for small investors while reducing compliance burden for depository participants (DPs). The regulator officially decided to exclude Zero Coupon Zero Principal (ZCZP) bonds and delisted securities from the valuation threshold used to determine BSDA eligibility.
Key Regulatory Changes
The most significant reform involves excluding specific securities from BSDA eligibility calculations. SEBI stated in its latest circular that the value of ZCZP bonds and delisted 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.
| Parameter: | Previous Rule | New Rule |
|---|---|---|
| ZCZP Bonds Valuation: | Included in threshold | Excluded from threshold |
| Delisted Securities: | Included in threshold | Excluded from threshold |
| Eligibility Reviews: | Occasional | Quarterly mandatory |
| Account Conversion: | Manual process | Automatic for eligible accounts |
Enhanced Valuation Framework
SEBI has established clearer guidelines for security valuation within BSDA accounts. For valuation purposes, the value of holdings will be based on daily closing prices or Net Asset Values (NAVs). When 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, DPs will calculate the account value using the last available closing price. However, the value of suspended securities, delisted securities, and ZCZP bonds will not be considered at all while determining BSDA eligibility.
Mandatory Quarterly Reviews and Default Conversion
Under the new framework, DPs are now required to review the BSDA eligibility of all accounts every quarter, replacing the previous occasional review system. The regulator has mandated that if an investor is eligible for BSDA, the DP must open or convert the account into BSDA by default.
Investors who prefer to maintain a regular demat account instead of BSDA must provide their active consent through a verifiable and authenticated channel prescribed by the depositories. 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.
Implementation Timeline and Background
These changes will come into effect from March 31, 2026, providing market participants sufficient time to adapt their systems and processes. The Basic Services Demat Account facility was originally introduced by SEBI in 2012 to reduce the burden of demat charges on investors with small portfolios.
| BSDA Details: | Specifications |
|---|---|
| Maximum Holdings Value: | ₹10.00 lakh |
| Implementation Date: | March 31, 2026 |
| Introduction Year: | 2012 |
| Primary Benefit: | Reduced demat charges for small portfolios |
BSDA serves as a more basic version of a regular demat account, with the value of holdings required to be below ₹10.00 lakh to maintain eligibility for reduced charges and simplified services.
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