In investment jargon, you have often heard the term depository many times. It refers to an organisation established to hold securities like shares, debentures, bonds, mutual fund units, etc. of the investors in dematerialised form through an agent registered with SEBI i.e. Depository Participant. The two apex depositories in India, incorporated with SEBI namely NSDL and CDSL.NSDL is a pioneer depository in India promoted by the prominent banks and other institutions.
On the other end, CDSL is the second largest depository of the country after NSDL, which operates in Bombay Stock Exchange.Due to the similarities in their functions and services, people easily get confused amidst these two. Here, we’ve compiled the differences between NSDL and CDSL, in this article.
Content: NSDL Vs CDSL
|Basis for Comparison||NSDL||CDSL|
|Expands to||National Securities Depository Limited||Central Depository Services Limited|
|Meaning||NSDL is the first depository established in India, which ensures trading and settlement of securities in electronic form.||CDSL is the second largest depository in India, which facilitated book entry transfer of securities.|
|Key Promoters||IDBI, UTI and NSE||BOB, BOI, SBI, HDFC and BSE|
|Market||National Stock Exchange (NSE)||Bombay Stock Exchange (BSE)|
|Active Investor Accounts||1.44 crores||1.06 crores|
|Demat Custody Value (in crores)||1,09,06,227||11,98,327|
NSDL is the primary electronic depository of securities in India, that came into existence in the year 1996, based in Mumbai, Maharashtra. The promotion of NSDL is done by the country’s largest banks and institutions, i.e. IDBI, UTI and Bombay Stock Exchange. Further, India’s leading banks hold a stake in NSDL.
There are more than 1.4 crore active investor’s accounts and above nine lacs accounts having debt instruments in NSDL. There are around 26000 service centres covering 1900 (approx) cities. Demat custody includes shares, debenture, bonds, commercial papers and so on.
Basic services provided by NSDL include account maintenance, settlement of trade, dematerialization, rematerialization. It also facilitates off-market transfers and inter-depository transfers, pledge and hypothecation of securities, stock lending and so on.
CDSL is a depository that holds securities in dematerialized form and facilitates trading and settlement of securities to be processed by book entry. It is the second largest central depository of securities in India, based in Mumbai, Maharashtra. The depository began its operations in February 1999. It is promoted by Bombay Stock Exchange in association with prominent banks of the nation, i.e. State Bank of India, Union Bank of India, Bank of Baroda, Bank of India, Standard Chartered Bank.
Securities available for demat includes equity, debentures, bonds, commercial papers, government securities, certificate of deposit, mutual funds and so on. The total number of client accounts in CDSL is over 1.06 crores as on Feb 2016. There are 581 depository participants and 161 branches.
Key Differences Between NSDL and CDSL
The significant differences between NSDL and CDSL are discussed in the points given below:
- NSDL is the pioneer electronic depository of securities, established in India. On the other hand, CDSL is the second central depository of securities which facilitates book entry transfer of securities.
- When it comes to promotion, NSDL is promoted by India’s apex institutions like IDBI (Industrial Development Bank of India), UTI (Unit Trust of India) and NSE (National Stock Exchange) whereas CDSL is promoted by Bombay Stock Exchange in association with Bank of Baroda, State Bank of India, Housing Development Finance Corporation, Union Bank of India, Standard Chartered Bank.
- NSDL operates in the NSE. Conversely, CDSL operates in BSE.
- The total number of depository participants in NSDL is 272 and in CDSL is 581.
- Account wise, the active investor accounts in NSDL are comparatively higher than in CDSL.
Under the depository system, securities are stored in the depository accounts of investors akin to holding money in a bank account. In this system, transfer of ownership takes place by way of simple account transfer. The system has eliminated all the risks and inconvenience related to the physical certificate system. Moreover, the transaction cost in this system is relatively lower than the previous system.