In India, a demat account is mandatory to buy and sell shares of companies on stock exchanges. These demat accounts are offered only by two depositories in the country, namely the Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). Before we get to the main part of the article, let’s quickly take a look at the two depositories in India and the difference between the both of them.
One of the majorly significant differences between the two depositories operating in India are the entities controlling them. NSDL was promoted and is controlled by the National Stock Exchange (NSE), whereas CDSL was promoted and is controlled by the Bombay Stock Exchange (BSE).
The next big difference between NSDL and CDSL lies in their operating markets. The NSE is the primary operating market of NSDL, whereas the BSE is the primary operating market of the CDSL. Apart from these two differences, there aren’t many others to differentiate the two depositories.
Now that you’re aware of NSDL, CDSL, and their differences, let’s now take a look at who depository participants are.
Did you know that you cannot open a demat account directly from depositories? Yes, you read that right. Instead, you would have to go through another entity called the depository participant (DP).
A depository participant is nothing but an entity that’s a member of either one or both of these depositories. And usually, a DP also provides stock broking services as well like Motilal Oswal. Depository participants basically act as middlemen between you and the depository. And in return for providing services, they levy DP charges, which you would have to pay to avail their services.
Although there are only two depositories in India, there are multiple depository participants. Some are registered with NSDL, while others may be registered with CDSL. A few depository participants cum stock brokers like Motilal Oswal are registered with both NSDL and CDSL.
According to the data from the Securities and Exchange Board of India (SEBI), there are as many as 281 depository participants registered with NSDL as on December 06, 2021. If you thought that this number was high, it increases significantly when it comes to CDSL. As on December 06, 2021, there are around 622 depository participants registered with the CDSL.
Although all depository participants provide the same level of services more or less, the DP charges that they levy may vary from one entity to another. Therefore, it is important that you do thorough research into the quality of service that’s being provided and the DP charges being levied by a depository participant before finalizing one. Motilal Oswal levies some of the lowest DP charges and provides exceptional service and support. If you ever wish to open a trading account and a demat account, make sure to get in touch with Motilal Oswal right away.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account
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