SEBI Simplifies Basic Services Demat Accounts, Relaxes Eligibility Norms and Reduces Compliance Burden [Read Circular]

The Securities and Exchange Board of India (SEBI) issued a circular dated December 24, 2025, enhancing the facility of Basic Services Demat Account (BSDA) to boost investor participation in the securities market.

What is BSDA

A Basic Services Demat Account is a low-cost demat account meant for small investors. It offers limited services but at reduced charges, provided the value of holdings remains within the prescribed threshold.

Key changes announced by SEBI

SEBI has decided that certain securities will no longer be counted while calculating the value of holdings for BSDA eligibility. These include:

• Zero Coupon Zero Principal (ZCZP) bonds
• Delisted securities

This means investors holding such securities will not lose BSDA benefits merely because of these holdings.

Valuation of securities clarified

The circular also clarifies how different securities should be valued for BSDA eligibility:

• Illiquid securities will be valued at the last closing price
• Suspended securities, delisted securities, and ZCZP bonds will not be considered at all
• For listed securities and mutual funds, daily closing price or NAV will be used

Quarterly review made mandatory

Depository Participants are now required to reassess BSDA eligibility every quarter. If an existing demat account becomes eligible for BSDA, it must be converted into a BSDA automatically unless the investor gives active consent to continue with a regular demat account.

Active consent required for regular demat accounts

SEBI has made it clear that investors must give explicit consent through an authenticated and verifiable channel if they wish to open or continue with a regular demat account instead of a BSDA. This step is aimed at preventing unnecessary higher charges for small investors.

Implementation timeline

• The circular will come into effect from March 31, 2026
• Depositories have been directed to amend their bye-laws and systems
• DPs must implement the changes within 90 days after system testing

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