Introduction

NSDL is the National Securities Depositories Ltd and CDSL is the Central Depositories Services Ltd. Both NSDL and CDSL are responsible for holding shares of millions of traders and investors electronically. Both these depositories are registered with the government of India, work in the same manner as a Demat account and are regulated by SEBI or the Securities and Exchange Board of India.

Difference between NSDL and CDSL

Here’s a look at some of the basic differences between NSDL and CDSL. 

• The main job of both these depositories is to coordinate and manage the trades and orders coming from the two main stock exchanges in India. 

• These are the NSE or National Stock Exchange and the BSE or the Bombay Stock Exchange. 

• NSDL oversees the management of the trades coming in from the NSE 

• CDSL oversees the management of the trades coming in from the BSE. 

• Even though two depositories oversee the two different exchanges, both the NSE and the BSE are free to choose which depository they want to use between the NSDL and the CDSL. 

• The Demat account that is held by the CDSL has 16 numerical digits 

• The Demat account that is held by the NSDL has 14 numerical digits and starts with ‘IN’.

• NSDL was incorporated in 1996 

• CDSL was incorporated in 1999. 

• The NSDL is promoted by the IDBI Bank and NSE 

• The CDSL is promoted by the BSE.

The Working of the Depositories

Here is a look at how both depositories work. 

• The working of both these depositories is very similar to that of banks and how they work when it comes to cash and FDs.

• Take for example an individual investing their cash in a savings account instead of putting it inside a safe.

• The holding of the shares you have invested in is done in electronic form by the depositories. 

• The Demat account that you hold with your stockbroker acts as a middleman of sorts when it comes to helping you trade daily. 

• The shares or securities are otherwise held by either the NSDL or the CDSL. 

• Both CDSL and NSDL also prove to be important when the time comes for dividends to be distributed among investors by companies. 

• Since companies can only pay the dividends to investors if they know their details, the depositories play the part of transferring the dividends electronically with ease.  

Benefits of a CDSL Demat Account

1. CDSL does not levy any costs to open a Demat account with a DP.

2. With the help of CDSL’s electronic access to securities information provision investors can securely access their investments electronically at any time and from anywhere. 

3. Traders can use the CDSL website to manage multiple Demat accounts with ease. 

Benefits of an NSDL Demat Account

1. Next to NIL chances of wrong deliveries through NSDL.

2. Since shares are stored electronically, it is more convenient.

3. Transfer of securities takes place seamlessly and fast

4. When you have an NSDL Demat account, buyers and sellers are automatically matched and this ensures optimal liquidity.

5. Trades holding an NSDL Demat account have the convenience of changing their details like name, address, etc, easily.  

Conclusion

As long as you know the basic format of both the CDSL and NSDL demat account numbers, you will be able to recognize which depository holds your Demat account. What you need to remember is that without a Demat account, you cannot indulge in trading either in the NSDL or CDSL. This is why it is important to open a Demat account with a trusted stockbroking company.