Markets regulator Sebi has proposed a review of the facility for 'basic services demat account', suggesting that the zero coupon zero principal (ZCZP) bonds (a funding instrument for NGO projects) be excluded from the portfolio value calculation used to determine its eligibility.
The draft proposal, if implemented, will support the twin objectives of ease of investment and ease of doing business, Sebi said in its consultation paper issued Monday.
A basic service demat account, or BSDA, is a more basic version of a regular demat account. The facility was introduced by Sebi in 2012 for reducing the burden of demat charges on investors with small portfolios.
A recent review by Sebi had already increased the value limit for securities in a BSDA to Rs 10 lakh, with proposals to exclude certain assets like ZCZP bonds from the portfolio value calculation. The facility aims to reduce the burden of demat charges for investors with small portfolios.
An individual can only have one demat account and one BSDA across all depositories. The total value of holdings must be Rs 10 lakh or less to qualify for a BSDA with low or minimal annual charges (nil for holdings up to Rs 4 lakh, Rs 100 for for holdings of Rs 4-10 lakh).
Key characteristics of ZCZP bonds include no interest and the original investment amount not being repaid on maturity. They are specifically designed for social development projects and are used by NPOs to raise funds.