Sebi proposes to exclude ZCZP, delisted stocks for BSDA calculation

The Securities and Exchange Board of India (Sebi) has proposed exclusion of the value of so-called zero coupon zero principal (ZCZP) bonds and delisted securities from portfolio value calculations to determine a basic services demat account (BSDA).

 

BSDAs are a special type of demat account introduced by Sebi to reduce maintenance costs for small retail investors who hold low-value securities. Such account holders don’t have to pay any annual maintenance charges (AMC) for the value of holdings up to Rs 50,000.

 

ZCZP bonds—widely used under social impact frameworks—should not be counted while determining whether an investor qualifies for a BSDA, the regulator has suggested.

 

These instruments are non-transferable, non-tradable and have no monetary return, making them closer to a “social contribution” than a liquid investment asset, the regulator said.

 

Similarly, delisted securities have also been proposed to be excluded from portfolio value calculations, bringing them on par with suspended securities, which are already ignored due to lack of price discovery and liquidity. Illiquid securities, however, will continue to be valued at their last closing price. These valuation rules will not apply to promoter individuals.

 

Furthermore, depository participants have to reassess BSDA eligibility at the end of each investor’s billing cycle, which varies across participants and creates operational complexity.

 

The regulator has proposed shifting to a uniform quarterly reassessment to simplify the process and ensure consistency across entities.

 

Also, investors who wish to retain a regular demat account rather than a BSDA must send consent exclusively from their registered email. Depositories have told Sebi that this leads to delays and poor response rates.

 

The regulator has now proposed allowing consent through “any authenticated and verifiable channel,” providing greater flexibility for both investors and intermediaries.