Summary of this article
Sebi removed zero coupon zero principal bonds from the valuation threshold for BSDAs
Delisted securities also removed from valuation threshold in aim to ease market participation
The Securities and Exchange Board of India (Sebi) has released amended guidelines to remove zero coupon zero principal bonds from the valuation threshold for Basic Services Demat Account (BSDA). The change in guidelines was made for promoting ease of doing business and will take effect from March 31, 2026 Sebi said in a circular.
BSDA is a low-cost demand account introduced for small investors, which offers them lower maintenance charges for asset holdings of up to Rs. 10 lakh. Sebi introduced these accounts to boost market participation and lower the financial burden to first or sole accountholders. In order to enhance the framework, the markets regulator further decided to remove delisted securities along with the zero coupon and principal bonds from the eligible criteria.
The move was touted as improving the BSDA framework and simplifies investing. Additionally, it also reduces the compliance burden for depository participants.
Sebi said in the circular: "It has been decided to exclude Zero Coupon Zero Principal bonds and delisted securities for reckoning the threshold for BSDA.”
For an investor holding zero coupon zero principal bonds, the value of these instruments will not be counted while checking the eligibility under BSDA.
Sebi’s decision comes following feedback from market participants to a draft circular issued last year. Sebi simultaneously also eased norms for issue of duplicate securities. Sebi raised the documentation requirement for duplicate securities to Rs. 10 lakh, to help investors recover lost or damaged securities with greater ease, which now will require lesser documentation to be filed.
For illiquid securities, Sebi said that depository participants will calculate the account value with the last closing price of the security. It also said that depository participants will now be required to review the BSDA eligibility of the accounts every quarter.
Sebi also mandated depository participants to open or convert accounts of investors who are eligible for BSDA by default. If an investor eligible for BSDA wants to maintain a regular demat account, they will need to provide their active consent through a verifiable and authenticated channel prescribed by the depositories, the regulator said.
Additionally, all depository participants need to reassess all existing demat accounts and convert all eligible accounts into BSDAs unless the investor specifies otherwise.
Sebi further said that “the value of holding shall be determined by the depository participants on the basis of the daily closing price or the net asset value (NAV) of the securities or units of mutual funds, as the case may be”.
It added: “Where such price is not available, the last traded price may be taken into account. For unlisted securities other than units of mutual funds, face value may be taken into account. For illiquid securities, the last closing price may be taken into account. The value of suspended securities, delisted securities and Zero Coupon Zero Principal bonds may not be considered for the purpose of determining eligibility of demat account as BSDA.”
