Central Depository Services Limited (cdsl): Indian Economy
Introduction To Central Depository Services Limited
• Indian electronic securities depository CDSL (Central Depository Securities Limited) was established in 1999 and is headquartered in Mumbai, Maharashtra. It supports account transfers and is the second-largest securities depository in India.
• Among the Indian banks and financial institutions pushing it are the State Bank of India (SBI), HDFC Bank, Bank of Baroda, Bank of India, Standard Chartered Bank, and the Bombay Stock Exchange.
• Like NSDL, it provides all services, including order settlement, trade facilitation, and electronic custody of financial assets. Similar to NSDL, this central depository holds all varieties of stocks and securities.
• Over 1.6 million active customer accounts and about 19,000 depository participant service facilities are listed in SEBI statistics.
Describe A Depository:
• Similar to a bank, a depository accepts electronic securities (such as shares, debentures, bonds, government securities, units, and so forth) instead of physical ones. It keeps track of money for depositors, therefore banks and depositories have many things in common.
• Securities are kept in an account by depositories, while money is kept in an account by the bank.
• A Depository transfers securities between accounts at the account holder's request, as opposed to a bank moving money between accounts.
In India, there are two depositories.
1. National Securities Depository Limited (NSDL).
2. Central Depository Services India limited.
What Services Are Offered By These Depositories?
1. Maintenance of Demat accounts.
2. Dematerialization and dematerialization.
3. Trade settlement.
4. Liquidity to markets.
5. Share transfers.
6. Market and off-market transfers.
7. Eliminate the risk of holding a physical asset.
8. Provide safekeeping.
9. Nomination/transmission.
Who Can Participate In A Depository?
• Depository participants (DPs), which act as its agents, provide its services to investors.
• These agents are chosen by the depository and subsequently approved by SEBI.
• According to SEBI laws, among others, banks, financial institutions, and SEBI registered trading members are among the business categories that can become DPs.
• Accounts at depositories are always easy to use. In other words, a trader can open a depository account without any funds in it.
Difference Between CDSL And NSDL
|
Particulars |
NSDL |
CDSL |
|
Abbreviation |
National Securities Depository Ltd. |
Central Depositories Services Ltd. |
|
Stock exchange |
National Stock Exchange |
Bombay Stock Exchange |
|
Establishment year |
1996 |
1999 |
|
Number of depository participants registered |
278** |
599* |
|
Investor Accounts |
1.95 crore** |
2.11 crore* |
|
Demat account number format |
16-digit alphanumeric number. Account number begins with ‘IN’ followed by 14 numeric digits |
16-digit Demat account number |
Conclusion
Under the depository system, securities are kept in investor depository accounts, much like cash in a bank account. Under this arrangement, ownership is transferred through a straightforward account transfer. The technology has taken care of all the risks and inconveniences associated with the physical certificate system. Additionally, compared to earlier systems, this system's transaction costs are reduced.