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India's capital market has transformed in recent decades. It moved from a paper-based system to a fully electronic one. Depositories played a crucial role in this by securely holding investors' securities in digital or dematerialised form.
There are two main depositories in India: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). They perform similar functions but differ in their structure and operations.
Understanding the roles and differences between NSDL and CDSL is essential, as it will help you to manage your demat account virtually.
NSDL started operations in August 1996. It became one of India’s first depositories and grew into one of the largest in the world.NSDL works closely with the National Stock Exchange (NSE), one of India’s biggest stock markets.
However, its operational scope is not exclusive and extends to the Bombay Stock Exchange (BSE), too. It stores your financial investments in electronic form, and it holds the following:
Shares
Bonds
Other securities
Mutual Funds
Along with NSE, major organisations promote NSDL, including:
Unit Trust of India (UTI)
Industrial Development Bank of India (IDBI)
When you open a Demat account with NSDL, your account number will start with "IN". Followed by this, there will be 14 digits (Example: IN12354128901283).
CDSL stores your investments in electronic form, just like NSDL. It started operations in 1999 and works closely with the BSE, one of India’s major stock exchanges. Like NSDL, its operational scope also extends to the NSE.
CDSL is unique because it is the only depository in India listed on the stock exchange. You can buy and sell its shares on the stock exchanges. It holds:
Shares
Bonds
Mutual funds
Other financial securities
Along with BSE, leading organisations promote CDSL, including:
State Bank of India (SBI)
HDFC Bank
Bank of Baroda
Bank of India
Even though both organisations work in similar ways, there are some differences that set them apart. Check the table below:
Feature |
NSDL |
CDSL |
|---|---|---|
Year of Establishment |
1996 |
1999 |
Promoted By |
NSE and financial institutions |
BSE and financial institutions |
Demat Account Number Format |
16-digit alphanumeric starting with 'IN' |
16-digit numeric |
Number of DPs (approximate) |
Around 294 |
Over 577 |
Listed on Stock Exchange |
Not listed |
Listed on NSE |
Number of Demat Accounts (Approximate) |
Over 4 crore |
Over 15.65 crore |
Market Share |
24% |
76% |
Operating Markets |
Primarily National Stock Exchange (NSE) |
Primarily Bombay Stock Exchange (BSE) |
Both depositories operate within a strict regulatory framework established by SEBI to ensure their security. Both depositories’ similarities shows through the services they provide. For instance, both of them:
Offer dematerialisation and rematerialisation of securities
Trade settlement support
Manage corporate actions like dividend payouts, stock splits, bonus issues, etc.
Nomination and account maintenance services
Typically, you do not select between NSDL and CDSL directly. It depends on the DP you register with. If the DP is registered with NSDL, your demat account will be with NSDL, and likewise for CDSL. However, the following are a few factors you can consider:
Customer Interface: Some users may find one platform more user-friendly
Speed of Services: Slight variations in transaction processing speeds
Tech Ecosystem: Differences in portals, mobile app experiences, and accessibility
Corporate Actions Handling: Generally consistent, but turnaround time may differ based on the DP’s internal processes
NSDL and CDSL are the two important demat and securities depository infrastructures. NSDL has a stronghold among institutional investors due to its early establishment. CDSL also has a notable presence in reaching out to retail investors.
The key takeaway is that both systems are secure, reliable, and integral to India’s digital investing framework. The choice between the two is incidental, based largely on the broker or bank.
Sources
https://nsdl.co.in/downloadables/pdf/SEBI_FAQ_on_Depository_System.pdf
https://nsdl.co.in/about/
https://eservices.nsdl.com/SecureWeb/About.html
https://nsdl.co.in/downloadables/pdf/e-Guide%20for%20demat%20account%20holders%20-%20English.pdf
https://www.cdslindia.com/about/overview.html
https://www.evotingindia.com/AboutUs.jsp?f=1
https://www.cdslindia.com/DP/dplist.aspx
https://nsdl.co.in/about/statistics.php
NSDL is promoted by NSE and uses a 16-digit alphanumeric demat account number. On the other hand, CDSL is promoted by BSE and uses a 16-digit numeric format.
Investors generally don’t choose directly. The choice depends on the DP (broker/bank) they register with.
Yes, both are SEBI-regulated and follow stringent compliance, so they are equally secure.
Check the format of your demat number or consult your DP or account statement.
Costs are usually determined by the DP, not the depository. Charges may vary depending on the service provider.
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Posted on 05 Jun
Geetanjali Lachke
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