What is CDSL and NSDL?

Demat Account Central Depositories (NSDL and CDSL)

Before the introduction of the Depository Act, 1966, the purchase and transfer of securities were done in physical form which was prone to losses due to theft, damage etc. Then online demat accounts were introduced to make trading online. Currently, there are two central depositories, which are NSDL and CDSL, in India, who open and manage demat accounts.

The central depositories provide the services through their registered members called depository participants (DP). Every stock brokers need to be registered with NSDL or CDSL to provide depository or demat services.

Any investor who wants to open a demat account needs to first approach a depository participant.

• NSDL (National Securities Depository Limited)Incorporated in Nov 1996, it was the first central depository. NSDL was promoted by National Stock Exchange (NSE) of India Ltd, Unit Trust of India, and Industrial Development Bank of India. It is the largest depository in the country handling most of the securities in dematerialized form in the Indian capital market. With a network of around 272 Depository Participants (the stockbrokers), it provides a wide range of services to stock brokers, stock exchanges, issuer companies, custodians, and end investors.
• CDSL (Central Depository Services Limited) Incorporated in Feb 1999, CDSL is the other central depository in India. It is promoted by Bombay Stock Exchange (BSE) India, along with a Bank of Baroda, Axis Bank, Bank of India, State Bank of India, HDFC Bank, Union Bank of India, and Standard Chartered Bank. There are around 605 Depository Participants registered with CDSL to connect with the end users.