SEBI Wants Delisted Stocks Removed From Portfolio Value — Will It Impact Your Demat Account?

The Securities and Exchange Board of India (SEBI) has proposed a few changes in rules linked to Basic Services Demat Accounts (BSDAs). The draft circular issued by the market regulator on Monday proposes to exclude delisted securities and Zero Coupon Zero Principal (ZCZP) bonds issued under the social impact framework from portfolio value calculations to determine annual maintenance charges (AMC) for these special demat accounts.

The proposal aims to simplify BSDA calculations while preventing inflated valuation of an investor’s portfolio. This will help in implementing a streamlined process for determining investor eligibility for basic service Demat accounts.

“It is proposed to treat delisted securities at par with suspended securities for the purpose of determining BSDA eligibility, as these securities lack active trading, transparent price discovery and liquidity”. For illiquid securities, SEBI has proposed that the last closing price be considered for determining BSDA eligibility. It also clarified that these valuation norms will not apply to promoter individuals,” SEBI said in its circular dated Nov. 24.

According to the circular, SEBI has proposed excluding delisted securities from portfolio value calculations, treating them like suspended securities. Illiquid securities will continue to be valued at their last closing price. These rules will not apply to promoter individuals.

SEBI has sought public feedback on the proposed changes till Dec. 15.

BSDAs are a special type of demat account meant to reduce maintenance costs for small retail investors who hold low-value securities. They were launched to encourage retail participation in the stock markets.

Introduced in 2012, BSDA allows investors zero annual maintenance charges for holdings up to Rs 4 lakh. A demat account will automatically be classified as a BSDA if an investor has only one demat account linked to the PAN across all brokers. Additionally, the total value of holdings in the account must be up to Rs 4 lakh in a financial year. Earlier, the portfolio value limit was Rs 2 lakh.

An AMC of Rs 25 per quarter, with applicable GST, is levied for portfolio value exceeding Rs 4 lakh and up to Rs 10 lakh. Similarly, accounts with holdings of above Rs 10 lakh are charged Rs 75 per quarter plus GST. The new rules came into effect on September 1, 2024.

For regular demat accounts, annual maintenance charges are levied by banks or brokerage platforms.

These new rules by SEBI aim to revise the BSDA norms. In its draft circular, SEBI noted that current rules cover listed, unlisted and suspended securities for BSDA valuation. However, delisted and illiquid securities have not been clearly addressed. 

While the delisted securities have no trading or price discovery value, they are still considered for the BSDA eligibility of a demat account. As a result, the market regulator is seeking public feedback to exclude the delisted securities entirely from BSDA valuation to ensure fair and consistent treatment for small investors.

Similarly, the market regulator has proposed to exclude ZCZP bonds from portfolio valuation for BSDAs. These bonds, issued under social impact frameworks, are non-transferable, non-tradable and have no monetary return, according to SEBI. The draft circular proposed to treat these instruments like ‘social contributions’ rather than as liquid investment assets for portfolio valuation.