What is the Difference Between NSDL and CDSL?

What is the Difference Between NSDL and CDSL?

The difference between NSDL and CDSL can be elaborated as the two depository organisations in India that hold securities like shares, bonds, mutual funds, etc., in dematerialised or electronic form on behalf of investors. While both offer similar Demat account facilities, you can explore the key differences between the NSDL and CDSL and know which is better for your investment.

What is NSDL?

NSDL, or National Securities Depository Limited, is the first and largest depository in India and facilitates the holding and trading of securities like shares, bonds, government securities, and mutual funds in electronic dematerialised form. Established in 1996 after the Depositories Act was passed, NSDL helps convert physical certificates into electronic form and holds them in Demat accounts to enable paperless trading. The NSDL offers services such as account opening, dematerialisation, settlement, pledge and hypothecation, and internet-based services to investors. With over 3.34 crore Demat accounts as of Sept 2023, NSDL aims to provide convenient, dependable, and secured depository services driven by technology and innovation. It has played a major role in revolutionising the Indian securities market.

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Table of Content

  1. What is NSDL?
  2. What is CDSL?
  3. Difference Between NSDL and CDSL
  4. What is the Significance of NSDL and CDSL?
  5. How do Depositories Work?
  6. Which is Better, CDSL or NSDL?

What is CDSL?

CDSL or Central Depository Services (India) Limited is one of the two major depository organisations in India that facilitates holding and transacting in securities like shares, bonds, government securities, mutual funds, etc., in electronic or dematerialised form. Established in 1999 after the Depositories Act 1996 was passed, CDSL helps investors convert their physical securities into electronic form and holds them in Demat accounts. It offers services like account opening, dematerialisation, rematerialisation, asset pledging and lending, and distribution of non-cash corporate benefits. CDSL aims to provide convenient, dependable, and secure depository services driven by technology and innovation. It has over 8 crore Demat accounts. You can understand the difference between NSDL and CDSL from the following table mentioned below.

Difference Between NSDL and CDSL

Here is a detailed table that can give a clear picture of the difference between NSDL and CDSL Demat accounts.

BasisNSDLCSDL
Promoted byNSE, IDBI, UTIBSE
Year of Establishment19961999
Number of Demat account3.34 crore approx.

8 crore approx.



 

Services Offered


 

Demat account opening, dematerialisation, rematerialisation, pledge, hypothecation, internet-based services, e-voting, SMS alerts.Demat account opening, dematerialisation, rematerialisation, pledge, hypothecation, distribution of non-cash corporate benefits.
Operating Stock exchangeNSEBSE
Demat Account NumberIt has 14-character alphanumeric characters which start with the IN prefix.

The CDSL Demat account number is a numeric code of 16 digits assigned to individual investors.


 

What is the Significance of NSDL and CDSL?

NSDL and CDSL are the two central securities depositories in India. They provide electronic dematerialisation and storage of securities and other related services. This has made the Indian capital market more efficient, transparent, and accessible to investors. Here are some of the key advantages of NSDL.

Significance of NSDL

Here are some of the key features of CDSL.

1. Service portfolio 

   - NSDL offers Demat account opening, dematerialisation, and rematerialisation services.

   - It also provides value-added services like pledges, hypothecation, e-voting, and SMS alerts. 

   - Internet-based facilities are offered for ease of access.

   - It aims to provide convenient and secure depository services.

2. Infrastructure 

   - NSDL has a high daily processing capacity and robust technical infrastructure.

   - It uses cutting-edge technology and systems for service delivery.

   - The connectivity and network enable seamless services across India.  

   - The emphasis is on innovation and efficiency through technology.

3. Customer reach 

   - NSDL has widened its reach across India through DPs.

   - It serves a large retail and institutional investor base.

   - The services are competitively priced in line with the market.

   - Customer service and grievance redressal are also priorities.

Significance of CDSL

Here are some of the key features of CDSL:

1.  Service offerings

   - CDSL offers Demat account opening and demat/remat services like NSDL.

   - It also provides value additions like pledging and distribution of corporate benefits.

   - The services are aimed at convenience and efficiency.

   - Charges are at par with NSDL for various services. 
 

2. Pan-India presence 

   - CDSL connects to 500+ DPs across the country.

   - It has over 8 crore Demat accounts spread nationwide.

   - The emphasis is on wider geographic coverage across India.

   - Technology enables smooth service delivery across networks.  


3. Customer experience 

   - CDSL focuses on easy-to-use interfaces and solutions.

   - Grievance redress is a priority for customer issues.

   - Competitive pricing in line with market standards.

   - The aim is efficient and seamless customer service delivery. Click here to know difference between dematerialisation and rematerialisation.

How do Depositories Work?

Depositories act as record keepers for securities transactions and help dematerialise physical securities into electronic form. When an investor opts for the dematerialisation of securities, the certificates are surrendered to the Depository Participant (DP), who confirms the dematerialisation request with the company's registrar.

The registrar validates the request and confirms dematerialisation with the depository. The depository then allots an ISIN and credits the investor's Demat account with the dematerialised securities while updating its records. This enables the investor to hold securities in electronic form, which can be easily traded. The depository periodically provides statements to investors of their security holdings and transactions. The securities are stored securely with the depository, and the investor continues as the beneficial owner. This helps do away with physical certificates and enables smooth trading and the transfer of securities.

Which is Better, CDSL or NSDL?

As a common review shows, there is not much difference between NSDL and CDSL in terms of operations and functionality from an investor perspective. The Indian Government registers both the depositories. The Securities and Exchange Board of India, or SEBI, regulates them. Both depositories have most of the large DPs affiliated with them and also offer the same services to investors holding assets with depository participants. From the point of view of an investor, these services are interchangeable, and they can choose the Depository based on their experience and their comfort level. There is not much to say about which is better since both offer world-class services.

To an extent, the Demat account normally comes along with the trading account. So when you open a trading cum Demat account, your Depository choice is based on where your DP is affiliated. Normally, most brokers are affiliated with both depositories, but they tend to open more accounts with one of the depositories. That ends up being the choice for the investors, too. One important criterion for the choice of the depository is the cost involved in transacting through NSDL and CDSL, and the lower the cost, the better customers will find them. That is what eventually cuts the deal in favour of one of the two depositories in India.

Conclusion 
NSDL and CDSL are the two keystone depository organisations in India that have transformed the securities market into the digital age. NSDL, being the first mover, has established itself as the market leader in India. 
While stating the difference between NSDL and CDSL, they both offer similar core depository services, NSDL has a wider reach, larger investor base, and higher processing capacity. CDSL, however, is no less efficient and provides competitive services at par with NSDL. The charges and service offerings are largely similar for retail investors. For investors, the choice of depository is based on convenience and accessibility rather than any major difference in core services. Overall, the seamless working of both NSDL and CDSL has helped develop the capital markets by making the holding and trading of securities completely paperless and hassle-free for investors.

FAQs on Difference Between NSDL and CDSL

Yes, you can transfer shares from the NSDL Demat account to your CDSL Demat account.

The NSDL is a private entity; it offers investors in India the opportunity to keep their financial securities & manage them through a stock broker portal.

SEBI regulates the function of NSDL