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Introduction

The implementation of the Depositories Act in August 1996 paved the way for the creation of the NSDL. NSDL, National Securities Depository Limited, is one of the largest depositories in the world. It has developed a state-of-the-art infrastructure that manages most of the securities owned and sold in dematerialized form on the Indian stock market. While India had a thriving stock market that was more than a century old, paper-based trade settlement created major problems, such as weak distribution and delayed transfer of title, etc.

Facilities Offered by NSDL

NSDL offers the following facilities to its members: 

  • Dematerialisation - converting physical certificates to electronic form; 
  • Rematerialisation - conversion of securities in demat form into physical certificates;
  • Facilitating repurchase / redemption of units of mutual funds; 
  • Electronic settlement of trades in stock exchanges connected to NSDL; 
  • Pledging/hypothecation of dematerialised securities against loan; 
  • Electronic credit of securities allotted in public issues, rights issue; 
  • Receipt of non-cash corporate benefits such as bonus, in electronic form; 
  • Freezing of demat accounts, so that the debits from the account are not permitted;
  • Nomination facility for demat accounts; 
  • Services related to change of address; 
  • Effective transmission of securities; 
  • Instructions to your DP over the internet through SPEED-e facility. (Please check with your DP for availing the facility);
  • Account monitoring facility over Internet for clearing members through SPEED facility;
  • Other facilities viz. holding debt instruments in the same account, availing stock lending/borrowing facility, etc.

NSDL offers a variety of services to end customers, stock brokers, stock exchanges, custodians, issuers, etc. through its network of more than 270 Depository Participants/Business Partners. Using advanced and scalable technological platforms, NSDL operates to help investors and brokers in the country's stock market. NSDL seeks to ensure the protection and soundness of Indian markets by designing settlement options that improve productivity, mitigate risk and reduce costs.

NSDL plays a key role in the development of products and services that will help to meet the rising demands of the financial services sector. In the depository scheme, shares are deposited in depository accounts, which are more or less identical to those kept in bank accounts. Transferring the possession of shares is achieved by easy transfer of accounts. This approach avoids all the risks and problems usually associated with paperwork.

How to open an NSDL Demat account?

It's pretty easy to open a demat account. What you need to do is contact the NSDL DP (Depository Participant), which will help you know the procedures. Please fill in the form, attach your PAN card and proof of address copies. You also need to include your bank account information.

Upon opening your account, your DP will supply you with the DP Username and Customer ID, a copy of your Client Master Report containing the specifics of your account, the tariff sheet and the 'Rights & Responsibilities of Beneficial Owner and Depositary Member.' DP ID is an 8-character long code assigned by NSDL to all DPs to classify them. Client ID is an 8-digit code used to classify clients in the system. The combination of DP ID and Client ID would render your unique account number on the NSDL scheme.

What are the benefits of holding an NSDL Demat Account?

There are a variety of uses for your NSDL demat account. ⠀

  • You can apply to IPOs and NFOs. The same demat account can be used to buy and retain stock and other forms of securities.
  • You will automatically receive all corporate perks (bonus, copyright issues, etc.) in your demat account. Cash incentives, such as dividends declared by the company, interest or maturities due on your bond portfolios, etc., will be transferred to a bank account connected to your debit account. ⠀
  • You can use your demat account to make use of the 'loan against shares' facility provided by several banks, etc., to meet your financial requirements without requiring you to sell the investment.
  • You may convert all your investments in shares, bonds, debentures, government securities, sovereign gold bonds etc. held in paper form to demat form through your DP.
  • You can keep your investments in the mutual fund within the same account. You may subscribe to mutual fund units in demat form by simply listing your DP ID and Client ID in the application form. Investment in mutual funds by SIP is also possible through your demat account. You can send instructions to your DP or use NSDL's SPEED-e facility to redeem or repurchase mutual fund units.
  • You can participate in the purchasing offer by submitting your shares to the company through your debit account.
  • You may engage in the securities lending and investing scheme by lending securities that lie idle in your debit account and may receive market returns.

Basic Services Offered by the NSDL

Under the terms of the Depositories Act, NSDL offers a range of services to customers and other capital market players, such as clearing representatives, stock exchanges, banks and issuers of shares. This includes essential facilities such as account management, dematerialisation, rematerialisation, payment of funds by stock transfers, off-market transfers and inter-depository transfers, delivery of non-cash corporate activities and appointment/transfer.

The depository scheme, which connects issuers, depository participants (DPs), NSDL and Clearing Corporation/Clearing House of Stock Exchanges, enables the holding of shares in dematerialized form and the transfer of results through account transfers. This method, which enables script less trade, provides a range of direct and indirect services to market participants.

Value Added Services Offered by the NSDL

Depository is an electronic securities storage facility in which securities sales are handled by means of a book entry. In addition to the main facilities of electronic custody and commercial settlement systems, NSDL offers special services such as pledges, mortgages of shares, automated transfer of securities to clearing firms, allocation of cash and non-cash corporate benefits (Bonus, Privileges, IPOs, etc.), stock financing, demise of NSC/KVP, demise of warehouse receipts and Internet-based services such as SP.

NSDL has now set up a facility that allows brokers to deliver contract notes electronically to custodians and/or fund managers. The facility called STEADY (Securities Trading-Information Quick Access and Delivery) was introduced by NSDL on 30th November 2002. STEADY is a way of transmitting electronically over the Internet, digitally signed financial stock with encryption through market participants.

What is NSDL CAS?

NSDL Consolidated Account Statement (CAS) is a one-off declaration on all the assets in the stock market. NSDL CAS comprises transactions in stocks, preferred shares, index funds, mortgages, bonds, securitized instruments, money market instruments and government securities invested in debt. Both assets owned in single or joint names with you as sole/first holder shall be part of the NSDL CAS.

NSDL CAS is part of the broader vision of allowing all financial assets to be held electronically in a single debit account, as outlined by the Hon'ble Finance Minister in his July 2014 budget statement. As a step in this direction, SEBI launched this Unified Account Statement for all equity investments by consolidating demat accounts and mutual fund folios. NSDL CAS gives consumers an unmatched flexibility in monitoring their fund portfolio. They can effectively track the shares you hold, their valuation and the structure of your portfolio.

Internet Based Facilities offered by the NSDL

SPEED-e

SPEED-e, pronounced as 'speedy', facilitates demat account holders (including clearing members) to send instructions directly to the Internet through the SPEED-e website without the need to use paper. SPEED-e is open to all account holders whose members have subscribed to it.

An account holder has the preference of accessing SPEED-e either as a Password User or as an e-Token User. An e-Token user must be a clearing member. Password Users can debit their debit accounts only in lieu of designated Pre-Notified Clearing Member accounts, up to six, whereas e-Token Users may send instructions in favour of any account.

SPEED-e users can also review the current deposits and purchases in their demat accounts via an Internet-based Demat Account Statement (IDeAS) facility and track the performance of fulfilment of orders.

NSDL SPEED-e Mobile App

The SPEED-e mobile app is available for both Android users and iOS users. It can be downloaded from the respective app stores. The app allows account holders to monitor their NSDL demat account from anywhere anytime.

IDeAS

IDeAS, Internet Based Demat Account Statement, is a protected website set up by NSDL for demat account holders. It allows investors to view balances and purchases in demat accounts updated electronically but not in real time. This service is accessible to all members, including Clearing Representatives (CMs) who have opened an account for other participants under the NSDL scheme.

STeADY

STeADY is a facility that allows brokers to deliver/submit contract notes to custodians or fund managers remotely by sending digitally signed business details with encryption. It also allows portfolio managers to enrich the contract note and convert it to the custodian's instructions. The STeADY facility allows brokers to upload notes for cash and stock derivatives (F&O) segments.

STeADY allows brokers to send contract notices containing market details to custodians and fund managers via the NSDL e-services website. Custodians will be able to download these contract notes in the ISO 15022 message format (MT 515) for further processing in their back office. Custodians can periodically upload Contract Note Status Changes (CSC) to STeADY after performing the required matching. Brokers will be able to access and download these updates to their back offices. Fund administrators can also provide guidance to custodians for settlement purposes. STeADY is applicable in both FII Trades and Domestic Institutional Trades.

Depository Account Validation (DAN)

Depository Account Validation (DAN) is a secure web facility that offers an online gateway that allows subscribers to verify DP Username, customer ID and investor PAN via a file upload. This facility is open to Book Running Lead Managers, Syndicate Members, etc., Original Public Bid, Public Concerns, etc.

SPICE (Submission of Power of attorney based Instructions for Clients Electronically)

Clearing Members and clients who have issued a Power of Attorney (POA) to the Clearing Member, may send auto-pay-in directives to Participants (where Customers retain demat accounts) on the SPEED-e facility to debit Customer accounts and credit their Clearing Member (CM) Pool Accounts. Thus, removing the need to supply the Participants with paper-based delivery guidance.

SIMPLE (Submission of Instruction through Mobile Phone Login Easily)

SIMPLE, a facility that allows password-based users of the SPEED-e facility to send directions to the Client to clear the Member Pool Account on the SPEED-e website via their mobile phones (enabled with GPRS).

NSDL FAQs

1. What is the NSDL depository?

A depository is very much like the bank. The depository stores the assets (such as equity, bonds, government securities, units, etc. of investors in electronic form. In addition to storing shares, the depository also offers services related to securities transactions.

2. How can I avail the service of the NSDL Depository?

NSDL Depository integrates with investors through its agents called Depository Participants (DPs). If the investor wishes to take advantage of the facilities provided by the depository, he must open an account with the DP. This is equivalent to opening an account with a particular branch of the bank in order to access the resources of the bank.

3. Are all DPs the same?

NSDL has defined certain specific qualifications requirements for being a DP. In certain ways, the standards are identical or even higher than the corresponding provisions of the SEBI Regulations. All DPs are the same in the sense that they are named by NSDL only after they have been issued a Certificate of Registration by SEBI. However, the form of services available, the quality requirements and the costs for services provided which vary between DPs.

4. Can I open more than one demat account with the same DP?

Yes, you can. There is no restriction on the number of accounts you can open with a DP.

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