Charges for basic service demat accounts may reduce, SEBI excludes delisted and ZCZP Bonds from valuation for eligibility threshold

SEBI

The Securities and Exchange Board of India (SEBI) has further eased norms for the Basic Services Demat Account (BSDA) to enhance ease of investment for retail investors and simplify compliance for depository participants (DPs). Basic Service Demat Accounts have lower annual charges for investors.

In a circular issued today, SEBI said that Zero Coupon Zero Principal (ZCZP) bonds and delisted securities will be excluded while calculating the value threshold for BSDA eligibility. The move follows stakeholder feedback on SEBI’s earlier circular issued in June 2024. SEBI circular stated, "in order to provide ease of doing business to the depository participants (DPs) and ease of doing investments for the investors, it has been decided to exclude the following securities for reckoning the threshold for BSDA, Zero Coupon Zero Principal (ZCZP) bonds and Delisted securities".

With this move many investors may benefit as due to exclusion of these securities from the monetary limit to decide the Basic Services Demat Account, the charges may come down.

SEBI has also clarified valuation norms, stating that illiquid securities will be valued at the last closing price, while the value of suspended securities, delisted securities and ZCZP bonds will not be considered for determining BSDA eligibility. To ensure periodic compliance, DPs will now reassess BSDA eligibility every quarter, instead of doing it on a less frequent basis.

SEBI circular read, "The valuation of the illiquid securities shall be at last closing price for calculating the threshold for BSDA; and DPs shall now be required to reassess the BSDA eligibility every quarter".

SEBI had noted that while its existing circular specifies how listed, unlisted and suspended securities should be valued for BSDA purposes, it does not explicitly address delisted and illiquid securities. SEBI observed that delisted securities, like suspended ones, have no trading activity, no price discovery and no liquidity but their value is still counted for determining the eligibility for BSDA eligibility.  Hence SEBI proposed that delisted securities be excluded entirely from BSDA valuation, like suspended securities, to ensure consistency and fairness for small investors.

SEBI circular mandates that, eligible demat accounts must be converted into BSDAs unless investors give explicit, active consent through a verifiable channel to continue with a regular demat account.

The regulator has amended provisions related to opening and conversion of demat accounts, making BSDA the default option for eligible investors unless they opt otherwise. The revised norms will come into effect from March 31, 2026.

Depositories have been directed to amend their bye-laws, notify DPs, and put in place systems within 90 days to implement the changes. SEBI circular directed depositories to ready and test their systems. Circular read, "put in place appropriate systems and procedures to give effect to the provisions

made in this circular within a period of 75 days, and implement the provisions

after user testing within 90 days from the date of issuance of this circular".

What are Basic Demat Account services?

Under the basic service demat facility the annual charges are less compared to normal demat accounts. Such accounts have zero annual maintenance charges if the value of holdings in Demat is up to Rs 4 lakh, if the value exceeds 4 lakh and is up to Rs 10 lakh, then the charges are Rs 25 per quarter plus 18 percent GST. Accounts with holdings of above Rs 10 lakh are charged Rs 75 per quarter plus 18 percent GST. The revised rules were implemented from September 1, 2024, before that the eligibility criteria for BSDA were only Rs 2 lakh.