NSDL
What is NSDL (National Securities Depository Limited)?
National Securities Depository Limited or in short, NSDL is India's first and largest depository. Conceived in 1996, NSDL revolutionised securities market by bringing to Indian shores a fully electronic mode of holding and transferring securities wherein security certificates are not given unlike the traditional method.
How Does NSDL Work?
NSDL provides a secure and efficient platform for holding and transferring securities in dematerialized or demat form. It ensures smooth functioning of the securities market by:
- Holding Securities: Investors can hold shares, bonds, mutual funds, and other financial instruments in electronic form in their demat accounts.
Facilitating Transactions: Simplifies buying, selling, and transferring securities through a secure digital process. - Corporate Actions: Processes events like dividend, interest payment and split directly in demat accounts.
- Account Maintenance: Keeps track of the ownership and history of every transaction done by an investor.
Why NSDL?
- Risk-Free: Demat eliminates risks like theft and forgery, and even loss in case of physical certificates
- Ease of Transactions: Accelerates and smoothens buying and selling of securities along with their transfer.
- Transparency: Accurate and lower error-prone record-keeping and settlement.
- Enhanced Market Efficiency: Enhances the overall functioning of India's capital markets.
How to Open an NSDL Demat Account?
- Choose a Depository Participant, which can be a bank, broker, or any other financial institution registered with NSDL
- Fill the account opening form and submit the following KYC documents
- PAN card
- Aadhaar
- Address proof
- Agreement with the DP
- Mention the terms of service.
- Once authenticated, your demat account gets activated, and you can start holding and trading securities.
NSDL vs. CDSL
While NSDL is one of the two depositories in India, the other one is CDSL, which stands for Central Depository Services Limited. Both have the same objective, but NSDL is known for its association with NSE and the extensive network it has.
NSDL has played a very important role in digitizing and modernizing India's securities market, making it more secure, efficient, and investor-friendly.
