The Securities and Exchange Board of India (Sebi) on Monday suggested exclusion of zero coupon zero principal (ZCZP) bonds for determining eligibility of basic services demat account (BSDA) of small investors. It also proposed to treat delisted securities on par with suspended securities for determining such eligibility, as these securities lack active trading.
These measures will improve financial inclusion, the regulator said in a draft circular. Provisions related to eligibility for opening of BSDA, conversion of existing eligible demat accounts into BSDA, charge structure and valuation of securities for determining eligibility for BSDA are being relooked.
What did the SEBI document say?
“ZCZP bonds are fundamentally distinct from conventional securities held in a demat account as they are non-transferable, non-tradable, and do not provide any monetary return or redemption value to the holder,” Sebi draft said. ZCZPs may artificially inflate the portfolio value and make the investor ineligible for BSDA.
“Excluding delisted securities from BSDA valuation would ensure consistency and maintain fairness for investors whose holdings do not represent realisable market value,” the draft said. Price of illiquid securities may be considered for the purpose of determining BSDA eligibility.
SEBI to move forward with reassesment
To promote ease of doing business, Sebi will do a reassessment of eligibility of all the existing beneficial owners (BO) with respect to BSDA. Depository participants shall reassess the eligibility of all the existing BOs with respect to BSDA at the end of every billing cycle.