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What is NSDL and CDSL? | NSDL vs CDSL | Is Zerodha NSDL or CDSL?

In this article hide

1 What is NSDL and CDSL?

2 What is DP ID, BO ID and Demat ID?

2.1 What is DP ID?

2.2 What is BO ID?

2.3 What is Demat ID?

3 NSDL vs CDSL

4 Which is better NSDL or CDSL?

5 FAQs

In this article, we’ll first understand depository participant or DP ID and then discuss “What is NSDL and CDSL in India?“. We are confident that the learnings from this article will be very valuable for you.
Keep Reading!

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What is NSDL and CDSL?

A bank holds your money, and just like this, a deposit holds your financial assets.
A depository is a financial institution that does this and you need to pay certain DP fees to open an account with a depository participant linked to a primary depository. The depositary has the responsibility to protect your financial assets like bonds, mutual funds, stocks, and other assets in a paperless format.

Currently, there are two depositories operating in India. These are National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL).
Since it isn’t possible to open an account and trade directly with either of these bodies, depository participants step in. then who a Depository Participant is?

Each depository nominates agents who work for it directly with you. Such agents are known as depository participants. A depository participant works as an intermediary between the investor and the depository.

All participating depositors in India are registered on the Securities and Exchange Board of India (SEBI). Unless an agent has a valid SEBI certificate, he or she cannot work as a depository participant.

Let’s discuss the concepts related to depository participant terminology.

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What is DP ID, BO ID and Demat ID?

What is DP ID?

Every depository participant has a unique depository participant ID number, which is also referred to as the DP ID number.
For example, your DP ID is 12081500. It is the identification number of the Depository participant (DP), i.e. the entity where your Demat account is maintained.

What is BO ID?

The BO ID (Beneficiary Owner Identification Number) is an 8-digit number used to identify your unique Demat account held with the depository (CDSL), through your Depository Participant (DP).

What is Demat ID?

The Demat ID is a 16-digit number which is the DP ID followed by your BO ID. This is the unique Demat account ID that you will need when applying for IPOs or for generating the CDSL TPIN for holdings authorization.

So, let’s move ahead and discuss the difference between NSDL and CDSL.

NSDL vs CDSL

NSDL keeps electronic copies of stocks, ETFs, bonds, etc., traded on the NSE i.e. National Stock Exchange.
On the other hand, the CDSL stores electronic securities traded on the BSE i.e. Bombay Stock Exchange. However, exchanges can use both depositories for settlement and trading of securities.
NSDL is India’s oldest repository institution. It was established in 1996 after the enactment and promulgation of the Depositories Act in August 1996. By cons, CDSL is the second oldest depositary in the country. It was established in 1999.
Demat accounts held with the NSDL consist of two alphanumeric digits: ‘IN’ followed by 14 numeric digits. CDSL accounts typically have 16 numeric digits, making them easy to distinguish.
The primary promoter of NSDL is the National Stock Exchange of India. Besides NSE, the shares of NSDL are held by the following companies:
•   Kotak Mahindra Life Insurance Company Limited.
•   Canara Bank.
•   Union Bank of India.
•   Standard Chartered Bank.
•   Citibank.
•   HSBC Limited.
•   Deutsche Bank A.G.
•   State Bank of India.
•   HDFC Bank Limited.
•   IDBI Bank Limited.
•   IIFL Special Opportunities Fund.
On the other hand, the primary promoter of CDSL is the Bombay Stock Exchange. Besides BSE, the shares of CDSL are held by the following companies:
•   SBI.
•   Standard Chartered Bank.
•   HDFC Bank Limited.
•   Canara Bank.
•   Bank of Baroda.
•   Bank of India.

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Which is better NSDL or CDSL?

Both depositories perform the same functions and both are part of the governance of SEBI i.e. Securities and Exchange Board of India. Thus, there are no material differences between the two apart from their promoters, Demat account format, and year of establishment.

Investors can easily open a trading account with a Depository Participant linked with either depository.
In India, investors usually do not choose the depository institution. The depository participants like Zerodha or 5Paisa oversee the account opening process.
Make sure you choose a reliable and trusted broker who can provide you with state-of-the-art trading platforms and the best Demat account features.In addition, keep an eye out for benefits such as a zero annual maintenance charge (AMC).

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