NSDL vs CDSL: Understand the Difference Online In India | Espresso

The 4 Key Differences Between NSDL and CDSL

The National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are government-registered central depositories used to hold securities like stocks, mutual funds, bonds, property, etc., in an electronic format.

OPEN FREE ACCOUNT

IN 15 MINS*

What is NSDL?

NSDL, which stands for National Securities Depository Limited, is the largest and oldest electronic depository of securities in India, incorporated in 1996 in Mumbai, Maharashtra. It was the first of its type to offer trading and settlement of securities in Demat form.

The NSDL comprises a wide range of features, from dematerialization and rematerialization to transfers between depositories and off-market transfers. Lending and mortgage of securities are also part of the NSDL's list of offerings.
Also Read: Indian Depository Reciept

What is CDSL?

The Central Depository Services Limited (CDSL) is India's second-largest electronic depository of securities, incorporated three years after the NSDL in the same city. In addition to holding financial securities electronically, it also provides facilities for trade and settlement of orders.
Also Read: Indian Stock Market & its Settlement Process

Regarding services offered to investors, there's no significant distinction between opening a Demat account with an NSDL-registered or CDSL-registered depository participant. Both are regularized by the government and hold comparable value. However, there are a few subtle differences that you need to consider.

CDSL vs NSDL: What's the Difference?

  • Stock Exchange

    One of the most glaring disparities between the companies is that the National Securities Depository Limited keeps electronic copies of stocks, ETFs, bonds, etc., traded on the National Stock Exchange.

    On the other hand, the Central Depository Securities Limited stores electronic securities traded on the Bombay Stock Exchange. However, exchanges can use both depositories for settlement and trading of securities.

  • Demat Account Number

    Demat accounts held with the NSDL consist of two alphanumeric digits: 'IN' followed by 14 numeric digits.

    Central Depository Services Limited accounts typically have 16 numeric digits, making them easy to distinguish.

  • Promoters 

    The National Securities Depository Limited is promoted by the National Stock Exchange of India and other premier banks plus financial institutions such as the Industrial Development Bank of India (IDBI) and Unit Trusts of India (UTI).

    Alternatively, the Bombay Stock Exchange and banks like the State Bank of India, HDFC Bank, Bank of Baroda, Bank of India, and Standard Chartered Bank promote the Central Depository Securities Limited.

  • Establishment

    The National Securities Depository Limited was formed three years before the CSDL and had already pioneered the concept of dematerializing physical shares in the country.

    However, when it comes to the total number of depositors, the most recent data suggests that the CSDL has surpassed the NSDL with around 1.5 crore active accounts compared to the 1.1 crore accounts on the NSDL.

    Investors can easily open a trading account with a Depository Participant linked with either depository. Make sure to choose a reliable and trusted broker who can provide you with state-of-the-art trading platforms and the best Demat account features. Also, keep a lookout for benefits like zero Annual Maintenance Charge (AMC).

Conclusion

It's easy to conclude that there is not much of a difference between NSDL and CDSL. Both depositories are registered with the Government of India, regulated by the Securities and Exchange Board of India (SEBI), and offer almost identical services to investors — holding electronic copies of their stocks. The question of which one's better depends on the stock exchange you primarily look at for your trading.

Ultimately, it's your DP that picks a depository for you. As an investor, you have very little say on the matter. More prominent depository participants like the State Bank of India and others are registered with the NSDL and CDSL. Provided they hold valid power vested to them by an attorney, brokers can credit or debit securities from either of these depositories on behalf of their customers.

Share Market Knowledge Centre

Related Articles

  • What is Day Trading Margin?

    Day trading, also known as intraday trading, is the process of buying and selling securities in the stock market on the same day through a margin account. The objective of day trading online is to lock in profits from the movement of stock prices.

     

    ...Read More
  • Stop Loss in Stock Market & Its Use

    Stop-loss in the stock market helps to limit the loss in a trade. In other words, it is an order to sell the stock or any security when it hits a particular price. When an investor places a stop loss, he or she instructs the broker to sell the stock when it reaches a pre-defined price limit.

     

    ...Read More
  • What is Fundamental Analysis and How to Do it?

    If you have been trading online or wish to start soon, there are a few things that you need to do it. The first and foremost is to open a trading account and a Demat account. The next step is to find suitable stocks that you can invest in.

     

    ...Read More

Frequently Asked Questions

Depositories like the National Securities Depository Limited and Central Depository Securities Limited provide their services to investors through agents, who are known as depository participants. According to SEBI regulations, three categories of entities can become Depository Participants: financial institutions, banks, and Members of Stock Exchanges (MSEs) registered with SEBI.

A person can hold shares, debentures, bonds, etc., in a single account but can choose to open more than one Demat account if needed.

Dematerialization is the process through which physical certificates of shares are converted to an equivalent number of securities in electronic form. They are then credited to the investor's account held with his Depository Participant.