Introduction to Central Depository Services Ltd. (CDSL)
Central Depository Services Ltd., or CDSL as it is better known, is a central securities depository in India. It is a financial organization that serves as a godown for securities, shares and other tradable market instruments. The objective of the company is to provide a centralized space for all of its users: individual, institutional, financial companies, government, etc. that helps in making transactions, particularly electronic, much easier.
Understanding Central Depository Services Ltd.
CDSL maintains the book entry of all electronic transactions made to all depository participants (DP). DPs are agents of CDSL and they all hold their assets with the company for clearing, holding and settlement. The Beneficial Owner (BO), also called the investor, can open a dematerialization account (DEMAT) through the DPs to enable the transfer of the securities from the DP to the investor’s account. CDSL as a depository service plays an essential role in everyday transactions. Where once physical certificates had to be issued to determine the ownership of a share, CDSL eliminates that need. CDSL also ensures that its DPs are accountable for the investors’ data and dealings and provide detailed overviews to the BOs at intervals. On the other hand, at the time of issuing dividends, companies listed on BSE can consult CDSL on data about the shareholders and transfer the amount to them.
Highlights of Central Depository Services Ltd.
CDSL was promoted by the Bombay Stock Exchange as of December 2019, until BSE disinvested for CSDL to accept sponsors via leading banks of the country. CDSL holds shares listed on the BSE only, while its counterpart NSDL holds NSE’s shares. CDSL was established in 1999. There are 600+ DPs registered with CDSL in comparison to 250+ on NSDL. This is likely because BSE is an older stock exchange and has significantly more companies listed on it for a longer time than NSE. The DEMAT number for CDSL is a simple 16-digit number, like an account number.
