The full form of NSDL is referred to as National Securities Depository Limited.
Introduction
When we discuss about the Indian Financial Market, the one name that comes in our mind is of the National Securities Depository Limited (NSDL). NSDL plays an important role in the Indian Financial Market as a mediator between the investors and brokers.
NSDL was introduced to offer the trading facility of securities in dematerialized form mandated by the SEBI (Securities and Exchange Board of India) to eliminate theft, fake transfer, delay in transactions, and the tedious paperwork associated with physical certificates related to securities transactions. Here securities refer to equity shares, bonds, and debenture issued by various companies in the capital market. Dematerialized form or dematerialization refers to the conversion of physical certificates of securities to electronic form.
NSDL Full-Form – National Securities Depository Limited
NSDL was set up in 1996, after the enactment of the Depositories Act, 1996. It was set up as the first depository of India being promoted by Industrial Development Bank of India Limited (IDBI), Unit Trust of India (UTI), National Stock Exchange of India Limited (NSE), and State Bank of India (SBI). Mr. B A Prabhakar is the current chairperson of NSDL.
Business Partners of NSDL
Depository Participants (DPs)
Depository Participants (DPs) act as an intermediary between NSDL and the investors. A DP could be a public financial institution, a custodian, a bank, or a stockbroker as per SEBI (Depositories and Participants) Regulations, 1996. There are more than 276 DPs associated with the network of NSDL.
Issuing Companies / their Registrar & Transfer Agents
Securities issued by issuers through IPO can be dematerialized in the NSDL depositor.
Clearing Corporation / House
The clearing corporations/houses of stock exchanges are electronically linked to the depository to facilitate the settlement of the trades carried on the stock exchanges.
The stock exchanges that are linked up with NSDL to facilitate trading and settlement of dematerialized securities are as follows:
- Madras Stock Exchange Ltd. (MSE)
- National Stock Exchange of India Ltd. (NSE)
- Inter-connected Stock Exchange of India Ltd. (ISE)
- OTC Exchange of India (OTCEI)
- The Calcutta Stock Exchange Association Ltd. (CSE)
- The Delhi Stock Exchange Association Ltd. (DSE)
- The Bombay Stock Exchange (BSE)
- The Ahmedabad Stock Exchange (ASE)
Basic Services of NSDL
National Securities Depository Limited (NSDL Full Form) provides basic facilities like account maintenance, dematerialization, rematerialization, settlement of trades through market transfers, off-market transfers & inter-depository transfers, and non-cash corporate actions, and nomination/ transmission.
Special Services of NSDL
- Automatic delivery of securities to the clearing corporation.
- Facility for pledge and hypothecation of securities.
- Demat of National Savings Certificates (NSC) / Kisan Vikas Patra (KVP).
- Internet-based services such as SPEED-e, STEADY, and IDeAS.
NSDL Benefits
- Faster settlement cycle, i.e., the trades will be settled on the 2nd working day from the trading day.
- Faster execution of non-cash corporate benefits like rights, bonuses, etc.
- Reduction in brokerage by many brokers by making the process of trading easier.
- Periodic status on holding and transaction reports to investors.
- Elimination of problems related to the procedure of change of address of the investor.
- Ease in monitoring and managing portfolio since the account statement gives a consolidated position of investments in all instruments.
- Freeze Facility allows the beneficiary account holder to freeze securities in the account to prevent unexpected debit or credit.
- All grievances of the investors concerning the errors or negligence of DP or any problem raised due to software, hardware, and communication system are addressed and resolved by NSDL.
Conclusion
So this was all that you need to know about NSDL, why it was set up, partners of NSDL, services offered by NSDL, and the benefits of taking NSDL services. If you have any doubt or query related to NSDL, feel free to connect to us through the comments section below. We will try to resolve or answer your doubt or query at the earliest.