Last Updated on May 24, 2022 by Aradhana Gotur

It would surprise many to know that in earlier days, shares could only be purchased in physical paper form This scenario completely changed after CDSL and NSDL came into the picture – two registered share depositories in India that revolutionized stock markets completely. Both, CDSL and NSDL were incorporated by SEBI and hold equity shares, debentures, and mutual funds in electronic form. Let us deep-dive into what is NSDL and CDSL and what differentiates one from another.

What is CDSL?

Central Depository Services Limited (CDSL) was founded in 1999 to make depository services convenient, secure, and dependable in India. Over two decades have passed since its inception, and CDSL currently has over 4 cr investor accounts, Rs 50,000 cr securities in dematerialization custody, and securities that are valued at a whopping Rs 33 lakh cr.

Out of the two depositories in India, CDSL is linked to the Bombay Stock Exchange (BSE). CDSL supports securities, including equity shares, debentures, bonds, ETFs, and treasury bills in electronic form, thereby offering quick and smooth transfer of securities. CDSL launched its IPO in 2017 and got itself listed on the National Stock Exchange (NSE). 

The company became the first listed Asian depository and is the second listed depository in the world. Its main promoters include HDFC Bank, Standard Chartered Bank and Canara Bank. CDSL is present in over 120 cities and has more than 200 branches.

What is NSDL?

National Securities Depository Limited (NSDL) was inaugurated on Nov 8th, 1996, in Mumbai. It was India’s first electronic securities depository and provides a number of services to investors, brokers, custodians, and other market participants. NSDL was authorized after the enactment of the Depositories Act in 1996 and is linked to the National Stock Exchange of India. 

Being the first electronic securities depository, it eliminated the risks associated with physical transcripts. NSDL aims to support Indian stock market participants and provide safe and sound solutions while ensuring efficiency, safety, and cost minimization. 

NSDL has over 2.28 cr demat accounts, and over 4,100 accounts have been opened per day since 1966. Its leading promoters include UTI, IDBI, and NSE. It also has its presence in more than 1900 cities with more than 26,000 service centres.

What are the services offered by CDSL and NSDL?

Both NSDL and CDSL perform the functions of a depository. Their services can be availed through opening an account with a depository participant who can be a broker, a financial institution, or a bank. These DPs are accountable to shareholders and are required to provide the statement of accounts of all securities held and traded at the depositories to the shareholders.

Some of the services provided by the depositories (both, NSDL and CDSL) include maintenance of dematerialization accounts, settlement and transfer of shares, market and off-market transfers, distribution of non-cash corporate actions, account opening and others. 

Since the services provided by both depositories are through stockbrokers, investors are not directly charged by them. Brokers have their own fee structure, and fees vary depending on the depository participant one chooses.

What are the differences between CDSL and NSDL?

Stock exchange: There are two stock exchanges in India. NSDL is the depository for NSE and CDSL is the depository for BSE. It is important to note that both CDSL and NSDL can use either of the two stock exchanges to trade and settle securities.

Promoter: One of the key differences is in their promoters. NSDL is promoted by IDBI bank, UTI, and NSE, while BSE only promotes CDSL.

Dematerialization account number: CDSL and NSDL account numbers are a bit different. CDSL account numbers have 16 numeric digits, whereas NSDL account numbers are alphanumeric and have ‘IN’ followed by 14 numeric digits.

Registered DPs: CDSL has 599 registered depository participants, and NSDL has 278 depository participants.

Investor accounts: CDSL has over 4 cr investor accounts compared to NSDL, which has close to 2.28 cr investor accounts.

How do depositories work?

The first step for any investor or trader is to open a dematerialization account. A demat account holds an investor’s securities in electronic form, and CDSL and NSDL maintain these demat accounts.

In simpler words, the fundamental role of the depository is to provide safe storage space for electronic shares, and the demat account acts as the locker. Depositories also help in the distribution of dividends and provide shareholder information to the companies. 

Before the transfer of shares in electronic form, physical share certificates were issued to investors, and the transfer of these shares typically took 15-30 days and sometimes even longer. There are instances when these certificates would get torn or be lost, making it inconvenient for the stock market participants and arduous for the brokers and companies. Before the electronic transfer of shares existed, the transfer of shares from one owner to the next one took 15-30 days. 

Depositories have also made it easy for investors to check the status reports at any time and have made the transfer of shares instant and secure. Now, after an investor’s purchase order is executed, shares are credited to the investor’s demat account. Similarly, the shares are debited once the sale order gets executed.

For example, if one has purchased 10 shares of Hindustan Unilever today at the price of Rs 2,600 per share, these shares will be transferred to the demat account within two working days after the trading day (this is known as T+2 settlement). The process is similar while selling as well. Once a sell order is placed, the amount will be credited to the account within T+2 days. It is to be noted that while selling, depositories levy selling charges.

There is no reason to believe that the depository choice will impact an investor’s stock market return.


NSDL and CDSL have helped the Indian stock market successfully alleviate the many drawbacks of paper-based trading by leveraging technology and offering depository services for the shares. They introduced the Indian public to secure and efficient methods for dematerializing their shares and conducting trade easily and safely.

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