What Is The Difference Between NSDL And CDSL?

How depositories like CDSL and NSDL Work?

So, when you sell your securities they are automatically debited from the depository, and when you buy them they are automatically credited by the depository. So, in short, when you open a demat account your shares are held by these depositories. When a company needs to know its shareholders to send dividend, rights or for any other notification, it can get information from the two depositories in India. In India there are just 2 depositories the National Securities Depository Ltd and the Central Depository Services Ltd. You get a delivery instruction and other things from your depository, so you need to touch base with them for such details.

 

What is the difference between the NSDL and the CDSL?

NSDL:

NSDL(National Securities Depository Limited) is the oldest and largest electronic securities depository in India, which began operations in 1996, based in Mumbai, Maharashtra. It is the first depository in India to offer trading and settlement of securities in electronic or de-materialized form.

The NSDL is promoted by some of the country's largest banks and institutions, namely IDBI Bank, UTI and National Stock Exchange (NSE). NSDL has more than 1.5 crore of active investor accounts. NSDL has approximately 26,000 service centres covering approximately 1,900 cities.

Their safekeeping is not limited to stocks only and their service includes stocks, bonds, debentures, commercial papers, mutual funds, etc.

The basic services facilitated by NSDL include account management, de-materialization, settlement of exchanges and re-materialization. It also facilitates transfers between depositories, off-market transfers, collateral, lending and mortgage of securities.

CDSL:

CDSL(Central Depository Securities Limited) is another electronic securities depository in India, which began operations in 1999 and is also based in Mumbai, Maharashtra. It is the second-largest securities depository in India and facilitates an account transfer.

It is promoted by some prominent banks and financial institutions in India, such as the State Bank of India (SBI), HDFC Bank, Bank of Baroda, Bank of India, Standard Chartered Bank and Bombay Stock Exchange ( BSE). It provides the same function as NSDL as holding securities in de-materialized form and facilitates trading and settlement of securities in electronic or de-materialized form.

At CDSL, they offer services to hold stocks, debentures, bonds, commercial papers, government securities, certificates of deposit, mutual funds, etc. In 2017, CDSL has approximately 161 branches and approximately 1.10 crore of customer accounts with them.

Which depository to open an account? NSDL or CDSL

Which depository to open your account would depend on the broker with whom you submit your application.
If the broker sees that the charges at CDSL are cheaper than NSDL he may opt for that option.

These days we see that a number of new accounts are being opened by brokers. One cannot be sure if it is because of the charges, service or other aspects that one is preferred over the other.

How to open an account at NSDL and CDSL?

To open an account at one of these two, the Depository Participant must be registered with the Securities and Exchange Board of India.

These participants are allowed to debit and credit the accounts of the investor after valid instructions. One can receive regular statements showing the balance held in the accounts of both the National Securities Depository Ltd and the Central Depository Services. The software of both the nation's 2 depositories are reviewed regularly in order to ensure that they are very secure.

There is unlikely to be much difference between the CDSL and the NSDL, though investors can check with their broker before opening either a demat account.

Role of NSDL and CDSL

Both these institutions have played a tremendous role in helping shareholders move away from physical share certificates to holding shares in the electronic form. Today, we do not have to send physical share certificates for transfer like in the good old days, thanks to the role of NSDL and CDSL in helping to convert and hold shares in the demat form. In fact, the last two decades or so, has led to tremendous contribution from both these institutions. One thing that we must also emphasize, especially of the role of NSDL is that the transformation from physical certificates to electronic certificates was by and large without any major glitches. That was good for shareholders and all others who moved from physical to electronic shares. So, there is no doubt while the difference between the NSDL and CDSL is irrelevant, the role that they are playing is more relevant.

Role of NSDL and CDSL

Both these institutions have played a tremendous role in helping shareholders move away from physical share certificates to holding shares in the electronic form.

Today, we do not have to send physical share certificates for transfer like in the good old days, thanks to the role of NSDL and CDSL in helping to convert and hold shares in the demat form.

In fact, the last two decades or so, has led to tremendous contribution from both these institutions. One thing that we must also emphasize, especially of the role of NSDL is that the transformation from physical certificates to electronic certificates was by and large without any major glitches.

That was good for shareholders and all others who moved from physical to electronic shares. So, there is no doubt while the difference between the NSDL and CDSL is irrelevant, the role that they are playing is more relevant.

The major shareholders of both the institutions are some of the biggest banks in the country. Both must be credited with bringing about some meaningful transformation in the way we trade in shares and stocks.

A broker might choose to open account for his clients either at the NSDL or the CDSL.