10 Simple (But Important) Things To Remember About National Securities Depository Limited

National Securities Depository Limited (NSDL) is an Indian central securities depository under the jurisdiction of the Securities and Exchange Board of India, based in Mumbai. It was incorporated in 1995 as the first electronic securities depository in India with national coverage. It was formally inaugurated on November 8, 1996. NSDL provides a bouquet of services to investors, stockbrokers, custodians, issuer companies etc. through its nationwide network of Depository Participants or DPs and digital platforms.

Although India had a vibrant capital market that is more than a century old, the paper-based settlement of trades caused substantial problems such as bad delivery and delayed transfer of title. The promulgation of the Depositories ordinance in 1995 paved the way for the establishment of the National Securities Depository Limited (NSDL), the first depository in India.

Now, NSDL is one of the largest Depositories in the World. It has established a state-of-the-art infrastructure that handles most of the securities held and settled in dematerialized form in the Indian securities markets. Securities are held in depository accounts, which are similar to holding funds in bank accounts.

Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in physical certificates.

NSDL introduced the concept of 'Demat' to India. In less than 8 years of its existence, NSDL enabled India securities markets to implement T+2 settlement. It continues to provide world-class digital services to different stakeholders in the securities market.

Company structure: NSDL Group comprises National Securities Depository Limited (NSDL), NSDL Database Management Limited (NDML) and NSDL Payments Bank Limited respectively.

NDML and NSDL Payments Bank are two subsidiary companies of National Security Depository Limited (abbreviated as NSDL). It provides services related to Demat of securities, transfer and settlement of securities in the Indian Securities Market. NSDL e-Governance Infrastructure Limited is a separate company.

It offers services related to the issuance of PAN cards and also acts as a central recork-keeping agency for the National Pension System (NPS).

NSDL Facts & Figures - As of July 31, 2021 - NSDL has more than 2.28 Crore Demat accounts as of July 31, 2021. These Demat account holders belong to 99.19% of all pin codes in India. The number of certificates eliminated (approx.) is 5,258 Crore. The number of companies in which more than 75% of shares are in Demat is 15,081.

The average number of accounts opened per day since November 1996 is 4,186. It contributes to the majority of the settlement in the Indian securities markets and has a 90% share in the total value of assets held in Demat form in India.

Milestones

Is NSDL a government company?

(NSDL) are both government registered share depositories in India. Share depositories hold shares in an electronic form. ... CDSL and NSDL are to shares what banks are to cash and fixed deposits.

What is the role of NSDL?

NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency, minimize risk and reduce costs. At NSDL, we play a central role in developing products and services that will continue to nurture the growing needs of the financial services industry.

Is NSDL public or private?

NSDL India is not a Government-owned company. It is a privately held and professionally managed company that is authorised by the Government of India to offer depository services in India. NSDL is planning to go public in near future. NSDL was promoted by the Nation Stock Exchange Ltd (NSE) in 1996.

Which is better CDSL or NSDL?

In terms of services to investors, there is no key difference between having a demat account with a DP registered either with NSDL or CDSL. Both are regularised by the government and provide similar services.

Is NSDL safe?

NSDL is one of the two government authorised depositories in India. It is governed by the Depositories Act, 1996. NSDL is a safe, reliable and well-regulated depository. The demat account with NSDL is safe and convenient for online trading and investment.

What is NSDL in PAN card?

NSDL is the National Securities Depository Limited which was established in 1996. NSDL e-Governance Infrastructure Limited was originally set up as a Depository in 1995. On behalf of the Income Tax Department, the Tax Information Network (TIN) was set up as a repository of nationwide Tax related information.

How do I buy shares in NSDL?

You purchase securities in any of the stock exchanges connected to NSDL through a broker of your choice and make payment to your broker. Make sure you tell your broker you want only demat shares. Broker arranges payment to clearing corporation/ clearing house of the stock exchange.

Is Zerodha account NSDL or CDSL?

Zerodha is a depository participant of the CDSL depository. This means Zerodha works as a service agent for a demat account which is held by CDSL, one of two central depositories.

How do I know if CDSL or NSDL?

The Demat account has a 16-digit numeric character in case of CDSL, whereas in case of NSDL, the Demat account number starts with “IN” followed by a 14-digit numeric code. An example of a Demat account number is CDSL can be 01234567890987654 where an instance of a Demat account number is NSDL can be IN01234567890987.