• HDFC securities
• 22 Feb 2023
• Knowledge Centre

Today, you can easily buy and sell shares in India, from within the comfort of your home. Institutions like depositories have played a huge role in making trading accessible and regulated in India. The two main depositories in India are the National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd (CDSL). The functions of both the depositories are similar, including holding your securities such as shares, bonds and others, in a dematerialised form. However, there is a considerable difference between them as well.

What is a Depository?

Depositories are bodies that hold financial securities in electronic form and maintain records pertaining to the ownership of the same. Investors are linked to depositories through intermediary agents known as Depository Participants (DPs). Depositories help facilitate trades and enable the debit or credit of securities into the demat account of investors. They also provide listed companies with the requisite information about shareholders. Similarly, listed companies depend upon depositories to relay information to shareholders about corporate actions like dividend rights, stock splits, etc.

What is the NSDL?

The largest and oldest depository in India, the National Securities Depository Ltd (NSDL) was founded in 1996 in Mumbai. It was known to be the first depository that provided trading services in an electronic form. It has crores of active investors and is tasked with the safekeeping the financial securities in electronic form. Additionally, the NSDL carries out important services like dematerialisation, rematerialisation, inter-depository transfers, lending securities, etc.

What is the CDSL?

Set up in Mumbai in 1999, the Central Depository Services (India) Ltd (CDSL) is the second-largest depository in the nation. Similar to the NSDL, it provides various services associated with a depository such as holding financial securities in an electronic format, facilitating trade and enabling settlement orders, etc. The CDSL holds all the forms of stocks and securities just like the NSDL.

NSDL vs CDSL; What is the Difference?

Both depositories are regulated by the Securities Exchange Board of India (SEBI) and offer similar services that help in trading and investing efficiently. The process to register a demat account with the NSDL or the CDSL is almost the same.

However, the major point of difference between the two is the markets in which they operate. The NSDL is associated with the National Stock Exchange as the main operating market. On the other hand, the CDSL’s main operating market is the Bombay Stock Exchange (BSE). So, the DP will act as a liaison with either the CDSL or NSDL on your behalf, depending on the stock exchange you tend to deal with.

Moreover, the format of the demat account number of both depositories also differ. A demat account opened with CDSL will have 16 numerical digits in it, while those with NSDL will have two alphanumeric – ‘IN’ digits and 14 numeric digits.

NSDL was incorporated in 1996 and its promoters are NSE and IDBI Bank whereas CDSL was incorporated in 1999 and is promoted by the BSE.

Now that you know the differences between CDSL vs NSDL, you can open a demat and a trading account with DPs that are associated with either of the depositories. Choose your DP wisely after doing your research and looking at the costs involved.

For a full-fledged broker, you can open a Demat account with HDFC Securities, and for discount broking, you can Open Demat Account at HDFC SKY.