The Securities and Exchange Board of India (SEBI) has proposed significant changes to the Basic Services Demat Account (BSDA) facility, aiming to enhance financial inclusion and simplify investing for small investors across India. The market regulator announced these proposals on November 24, 2025, inviting public comments until December 15.
What is the BSDA Facility and Why It Matters
Introduced in 2012, the Basic Services Demat Account is a special, low-cost version of a regular demat account designed for investors with smaller portfolios. This facility helps reduce the cost of trading for retail participants. Under current rules, investors with holdings valued under ₹50,000 pay zero annual maintenance charges, potentially saving them between ₹100 to ₹1,000 plus GST that private brokerage firms typically charge.
Key Proposed Changes to BSDA Rules
SEBI's consultation paper outlines several important modifications to the BSDA framework. One of the most significant proposals involves excluding Zero Coupon Zero Principal (ZCZP) bonds from the portfolio value calculation used to determine BSDA eligibility.
The regulator argues that ZCZP bonds function more like social contributions than traditional investments since they're non-transferable, non-tradable, and don't provide monetary returns. Including them in portfolio valuation might artificially inflate an investor's holdings, potentially making them ineligible for BSDA benefits despite having limited realizable assets.
Regarding delisted securities, SEBI has proposed treating them similarly to suspended securities since both categories lack active trading, liquidity, and transparent price discovery. This change would ensure fair treatment for investors whose holdings don't represent realizable market value.
For illiquid securities that remain listed but aren't actively traded, SEBI suggests using the last closing price when determining BSDA eligibility. This approach acknowledges that these securities can still be traded through specific mechanisms while providing a consistent valuation method.
Digital Transformation and Regular Reviews
To promote ease of doing business for Depository Participants (DPs), SEBI has recommended quarterly reassessment of BSDA eligibility for existing account holders. This system-driven approach would ensure uniform evaluations across all DPs and maintain fairness for investors.
The regulator also proposed allowing digital consent submission through additional authenticated methods instead of restricting it to registered email IDs alone. This modernization would streamline account management and enhance customer convenience.
These proposed changes represent SEBI's continued effort to strengthen India's financial ecosystem by making investing more accessible to smaller participants while maintaining regulatory robustness. The December 15 deadline for public comments indicates the regulator's commitment to inclusive policy-making that considers stakeholder feedback before final implementation.
