SEBI Proposes Revised Basic Services Demat Account Norms for Small Investors

Draft Circular; Dated: 24.11.2025

1. Overview

The Securities and Exchange Board of India (SEBI) has proposed a revised and more streamlined framework for Basic Services Demat Accounts (BSDA) with the objective of improving ease of investment, enhancing operational clarity, and ensuring consistent eligibility assessment for investors with small holdings.

2. Exclusion of Certain Securities for BSDA Eligibility

2.1 ZCZP Bonds

SEBI has proposed that Zero-Coupon Zero Principal (ZCZP) Bonds—typically issued under social impact schemes—will be excluded when determining whether a Beneficial Owner (BO) qualifies for a BSDA.

2.2 Delisted Securities

Similarly, delisted securities will also be excluded from the computation of the value of securities held, ensuring that investors are not disqualified due to holdings that are non-tradable or illiquid.

These exclusions aim to ensure that BSDA eligibility truly reflects the investor’s active market engagement.

3. Treatment of Illiquid Securities

For determining the total value of holdings for BSDA classification:

• Illiquid securities will be valued at the last available closing price,
• This prevents arbitrary inflation in portfolio value and ensures fair assessment for small investors.

4. Quarterly Reassessment of Eligibility

SEBI has proposed shifting the BSDA eligibility reassessment from the existing method to a quarterly cycle.
This change provides:

• Better operational efficiency for depositories,
• Reduced administrative burden, and
• A predictable compliance timeline for investors.

5. Flexible Consent Mechanism for Converting to Regular Demat Account

Beneficial Owners (BOs) who wish to shift from a BSDA to a regular demat account may now provide consent Through any authenticated and verifiable mode, such as electronic authentication, digital signatures, OTP-based validation, or other secure digital channels.

This simplifies the transition process and enhances investor convenience.

6. Significance

The refined framework is expected to:

• Improve ease of participation for small and first-time investors,
• Bring clarity to the valuation and eligibility process,
• Reduce inadvertent BSDA disqualification, and
• Support SEBI’s efforts to promote financial inclusion in the securities market.

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