CDSL Demat Account - Meaning, Use and Registration

A CDSL Demat account is an electronic account managed by the Central Depository Securities Limited (CDSL) that holds securities in dematerialised i.e., digital format. It is used to maintain and hold different securities, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs), in electronic format.

In India, there are two major depositories that facilitate holding of securities in electronic mode: CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). The blog addresses everything you need to know about CDSL Demat Accounts.

What is CDSL?

CDSL stands for Central Depository Services Limited. Established in the year 1999, it operates under the Securities and Exchange Board of India and is one of the major depositories in India. It is responsible for holding securities such as bonds, mutual funds in dematerialised format.

It allows investors and financial institutions to conduct transactions in securities seamlessly, thus securing stock market trading. 

Please note that investors are now required to hold a demat account (either with NSDL or CDSL) to trade in the Indian stock market. 

Let’s understand how a CDSL demat account works, its key features and its importance. 

How Does a CDSL Account Work?

CDSL is operated by Depository Participants (DPs), that serve as an intermediary between the depository and investors (also known as Beneficial Owners or BOs). Here’s how a CDSL account works:

• The Investor opens a Demat Account with a CDSL registered Depository Participant (DP)
• A unique 16-digit BO (Beneficial Owner) ID is generated for every demat account created
• The shares bought are credited to the respective Demat Account after settlement. These shares, however, are held in electronic format.
• Similarly, once the shares are sold, it is debited from the account and transferred to the buyer's account.
• Investors can check all their holdings online through their DP’s trading platform or the CDSL EASI Portal. 

What is CDSL EASI?

The term CDSL EASI stands for CDSL Electronic Access to Securities Information, which is a digital platform that allows investors to view their portfolio holdings and securities online. 

One can register for CDSL EASI by following the steps below:

• Visit the official website of CDSL.

• Click on ‘Register’ and select the ‘EASI’ option.

• Now enter all the essential details like Demat Account number, DP ID, and other necessary information.

• Create a username and password to set up your login credentials.

• Do the OTP verification and identity authentication.

• Submit the OTP for successful registration. Once registered, you can log in using the newly created credentials.

To know more, read our blog on What is CDSL Easi and How to Register For It?

Benefits of CDSL Demat Account

Here are a few reasons why it is important to hold a CDSL Demat Account:

• Provides secure storage by holding securities in electronic format, thus eliminating the risk of physical certificates being lost/stolen/damaged
• Investors can easily manage their portfolios since all securities are in one demat account
• Provides faster settlements for transactions, enhancing liquidity
• Provides access to multiple investment options like mutual funds, bonds and equities
• Allows investors to also assign a nominee to their demat account

Which is Better: CDSL vs NSDL?

Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) are the two major depositories in India that enable shareholders to hold and trade securities (Shares, Bonds, etc.) in electronic format. Both depositories provide the same services. NSDL, which started in 1996, is the oldest and largest of the two depositories. However, CDSL has more active Demat accounts compared to NSDL.

NSDL is promoted by the National Stock Exchange (NSE) and other leading banks, while CDSL, which started in 1999, is promoted majorly by Bombay Stock Exchange (BSE) and other pre-eminent banking entities. 

In terms of functionality, both CDSL and NSDL have similar roles, such as maintenance of demat accounts, trade settlement, and managing corporate actions. CDSL, however, has a more significant number of active demat accounts compared to NSDL, primarily due to lower transaction fees.

Ultimately, the choice of depository is determined by which brokerage firm the investor selects since brokerages only register with one depository (either CDSL or NSDL).

To know more, read our blog on “Difference Between CDSL and NSDL”.

Things to Know About CDSL Demat Account

Here are a few important things to know about a CDSL demat account:

• Holdings are identified using a unique 16-digit BO (Beneficial Owner) ID
• For enhanced security, CDSL provides an SMS and email alert service
• Monitored by SEBI, providing a safety net for investors.
• Easi and Easiest services offered to manage and transfer securities electronically.
• Nomination facility allows you to assign a nominee to take over the management of your securities in the event of your demise
• Operating statements available offline on request from the Depository Participants

Conclusion

A CDSL Demat Account is a secure and advanced method for holding and managing your securities electronically. Whether you are a beginner or an expert investor, understanding CDSL, its features and the facilities, will help you to make the right choice. 

CDSL reduces the risks involved with physical share certificates. With features such as online portfolio management, faster settlements, and multi-asset options, CDSL simplifies trading in the stock market for investors.