A demat account is an electronic account that’s used to store securities such as stocks of companies, bonds, and mutual fund units. According to a mandate from the Securities and Exchange Board of India (SEBI), having a demat account is mandatory in order to buy or sell stocks of companies.
Now, demat accounts are offered by entities known as depositories. In India, we currently have two depositories - the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL). Apart from these two entities no one else can offer a demat account in India.
That said, if you wish to open a demat account for yourself, you should know that you cannot do so by approaching the depository directly. You have to do it through a depository participant (DP), which is basically an entity that is a member of a depository. Think of depository participants as a link between you and the depository. Everything from account opening to transfer of shares from your demat account to another has to be routed to the depository through the depository participant.
And if the depository participant that you choose to go with is a member of the National Securities Depository Limited (NSDL), the demat account that you open would be with NSDL. And if the DP is a member of the Central Depository Securities Limited (CDSL), then your demat account would be with CDSL.
So then, what about Motilal Oswal? Is Motilal Oswal CDSL or NSDL? If this is what you’re wondering right now, here’s something that can help clear things out.
Motilal Oswal is a depository participant cum stock broking entity that is a member of both the National Securities Depository Limited and Central Depository Services Limited. This effectively means that you can avail demat accounts from both NSDL and CDSL. In fact, at the time of demat account opening, you can choose to go with the depository that you are comfortable with. However, once you’ve opened the account, you cannot switch depositories later on.
With respect to the form and function of NSDL and CDSL demat accounts, there’s absolutely no difference between the two. They’re very similar to each other.
That said, the only point of difference between the two of them is that the National Stock Exchange (NSE) is the promoting entity behind NSDL and the Bombay Stock Exchange (BSE) is the promoting entity behind CDSL.
Also, the NSDL was the first-ever depository established in India in 1996, whereas the CDSL came into being only in 1999.
Apart from this trivial difference between NSDL and CDSL, they’re basically very similar in terms of functions. Want to open a demat account? Get in touch with Motilal Oswal right away. You can open one online using a paperless process within minutes.
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