CDSL – Central Depository Securities Limited

As we already know, there are two depositories in India which monitor security holdings of investors with stock exchanges. CDSL or Central Depository Securities Limited is the other primary depository in India apart from NSDL which functions to hold and trade securities in electronic form. Let us know in brief about CDSL:

What is CDSL?

CDSL or Central Depository Services Limited offers depository services in the Indian financial market which was founded in 1999. CDSL offers services of dematerialization and rematerialisation and the operations of the depositories are operated by SEBI. The depository is a more convenient method to hold the securities as an alternative to physical certificates.

Roles of CDSL

Just like NSDL, CDSL also has a major role to play in order to hold security deposits. Following are the given roles and responsibilities of central depository securities limited:

Demat Account Management

The depositories manage and update the demat account of investors and provide a detailed record of holding transactions and other important information related to the demat account.

Settlement of Trades

Trades are settled by the depositories by transferring the ownership of securities from seller to the buyer electronically. This makes the settlement process faster and easier while increasing its efficiency.

Safekeeping Securities

The main function of depositories is to ensure the safety of financial securities such as bonds, stocks and other financial instruments in electronic form. Depositories are safe as they reduce the risk of loss, theft or damage that is associated with physical certificates.

Pledging

Pledging of securities is executed by CDSL as collateral for loans and other financial transactions. The depositories are a safe place to facilitate the pledging process as they offer a secure and efficient mechanism.

Benefits of Using CDSL

Some of the key benefits of using CDSL includes:

• Simplifies buying, selling, and transferring securities, making it faster and more efficient.
• Digital records minimize the chances of frauds or duplication.
• Eliminates stamp duty on transfer of securities in electronic form which saves cost.
• CDSL operates through a large network of Depository Participants (DPs), making its services widely accessible across the country.

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