Sebi is considering revising Basic Services Demat Account facility to improve financial inclusion

Markets regulator Sebi on Monday proposed a revision to the ‘Basic Services Demat Account’ facility to improve financial inclusion, suggesting that ZCZP bonds should be excluded from the portfolio value calculation used to determine BSDA eligibility.The proposal, if implemented, would support the twin objectives of ease of investment and ease of doing business, the Securities and Exchange Board of India (Sebi) said in its consultation paper.

A basic service demat account, or BSDA, is a more basic version of a regular demat account. The facility was introduced by Sebi in 2012 to reduce the burden of demat charges on investors with small portfolios.The regulator explained that ZCZP bonds are fundamentally different from conventional securities held in a demat account as 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 from the investor than to an investment object capable of appreciation, liquidation or portfolio improvement.

Because BSDA eligibility is based on the realizable value of an investor’s assets, counting ZCZP bonds, whose value cannot be redeemed or traded, can artificially inflate a portfolio and make an investor ineligible for BSDA benefits, it added.

Accordingly, Sebi has proposed that “ZCZP bonds should not be taken into account while calculating the value of the asset for the purpose of determining the eligibility of demat accounts as BSDA”. The regulator has also proposed treating delisted securities on par with suspended securities as both lack active trading, liquidity and transparent pricing. Excluding delisted securities from the BSDA valuation would ensure consistency and fairness, especially for investors whose investments do not represent a realizable market value. For illiquid securities, Sebi noted that even though they are not actively traded, they remain listed and can still be traded through specific mechanisms. Accordingly, it has been suggested that the last closing price of such securities would be used in determining their eligibility for BSDA.

To facilitate business for Depository Participants (DPs), Sebi proposed that DPs reassess the eligibility of existing beneficiary owners for the BSDA on a quarterly basis, ensuring system-driven and uniform assessments for all DPs. It also recommended allowing BO consent through additional authenticated digital methods, rather than limiting it to the registered email ID.

The regulator has invited public comments on the proposals until December 15