CDSL or Central Depository Services (India) Ltd, is the second Indian central securities depository owned by the government as a registered depository which used to hold the various securities like stocks, shares, property etc in an electronic form. CDSL work for Bombay Stock Exchange (BSE) and it was founded back in February 1999. In this article, you will get all the basic information about the CDSL full form, benefits, how it works and may more.

CDSL Full Form

 CDSL full form is Central Depository Services Limited and it is together promoted by the State Bank of India (SBI), Bank of India, Bank of Baroda (BOB), HDFC Bank, Standard Chartered Bank, Axis Bank and the Union Bank of India. It is considered as the second most popular public sector in India after NSDL.

Features of CDSL

The main Features of CDSL is to hold the securities in certificated or in un-certificated form. It helps to over-come from the problem to register the trades in the books and only transfer of securities up to 500 shares in physical form. Most of the traders have adopted the form of holding the securities in electronic format for trading.

CDSL Web: https://www.cdslindia.com/index.html

How CDSL Works?

A depository operates like a bank and only the thing that is different from the bank is that it holds money whereas, in CDSL it holds stocks, shares, bonds etc. It is an administrative body that holds the securities of the investors in an electronic format when it is asked by the investor through a registered Depository Participant (DP).

The primary focus of Central Depository Service Limited is to give safe, reliable, useful and secure depository services to the investors or traders. After getting permission from the Securities and Exchange Board of India (SEBI) from February 1999, the CDSL started its working. They offer different services for holding the securities, equity, bonds, commercial papers, government, certificate of deposits etc.

Depository Participant (DP)

Depository participant (DP) offers depository services to investors. According to the SEBI issued the regulations, financial institutions, banks, custodians and the stockbrokers are eligible to act as DPs. Depository participant is a CDSL authorized agent that offers a link between the account holder or the Beneficial Owner (BO), the issuing company, Stock Exchange and many more.

The Central Depository Service Limited has been authorized DPs to give the service throughout India to help the investors in handling the digitalized form of securities. Investors that are using the depository services is known as the Beneficial Owner and they are required to maintain a Demat account to use the functions of Central Depository Service Limited that also includes the facilities of the dematerialization and transferring of securities.

Demat Account

For using the services of Central Depository Service Limited, it is necessary to own a Demat account. The normal formalities that are mandatory for opening a bank account are enough to open a Demat account. The Demat account is not only useful for using the services of the CDSL but also use its account for trading the stocks and securities currently.

Benefits

  • The main benefit of Central Depository Service Limited is that all the shares are holding in the electronic format so the risk of been loss, theft or any damage to the physical share to certificates has been neglected.
  • There is no need for stamp duty for the investors when it is transferring securities in dematerialized format.
  • Through this, the companies can directly credit their investors if in case of any right issue or bonus issue of shares.
  • The investor can get real-time information about the listed company management about the holdings and can track the change in any detail related to that security or stock.
  • The Central Depository Service Limited send the investor the statement that completely contains all the holdings of that period which will be helpful to the investors to make the informed decisions for their financial strategy.

Concerns

  • The pride possession of having the physical certificates at home is impossible with the Demat account.
  • The rural people who used to hold the physical certificates on their purchase are currently unaware of the system of the electronic form of depository services.
  • All the investments are in the digital format and a Demat account for all the financial transactions and the money that is involved in it is resides with the government.
  • There are multiple levels of the regulatory frameworks that are involving the various depositories Act, regulations, by laws of the depositories have to be followed by the Central Depository Service Limited holder.

Conclusions

 With the modern updates and awareness of the stock market, there is a huge number of people associated with the CDSL in order to open the Demat account and to do trading or investing. Some used the trading or investing as earning passive income and some are making this as there career.

This is the only way for the financial markets to go and for the investor to provide them with the services of Central Depository Service Limited. These things have motivated many investors and traders for making money in the stock market.

About Us

In this blog, we hope that you get the concept and the basics of the CDSL and how it works in India. CDSL benefits and demat account everything is explained through this article in simple manner. Trading Fuel is the blog site that add the content daily on the vast world of finance and mainly we focus on the technical analysis and its concepts. For any query you can directly contact us through mails. Hope you liked it and you got the concept.

~ Happy Learning~

Author

Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.