What is NSDL, its purpose and functions

NSDL Kya Hai: Just as our money is kept safe in the bank, similarly the shares, bonds, debentures or securities of the investors are kept safe in the depository in electronic form. There are mainly two depositories in India, one NSDL and the other CDSL.

In today’s article, we will talk about NSDL Depository. An experienced investor knows what is NSDL but for a beginner investor there is not much information about NSDL, but an investor needs to be aware of it.

That’s why we have written this article to solve your problem, we have tried our best to remove the doubts related to the NSDL of an investor from this article.

In this article you will get to know what is NSDL, when was NSDL established, what is the purpose of NSDL, what are its functions of NSDL, and what are the advantages and disadvantages of NSDL. So read this article completely till the end.

What is NSDL

sequence

1 What is NSDL (What Is NSDL )

2 Full name of NSDL (NSDL Ka Full Form )

3 When was NSDL established?

4 Objective Of NSDL

5 Work Of NSDL

6 Advantages Of NSDL (Advantage Of NSDL )

7 Disadvantage Of NSDL

8 FAQs Related to NSDL

9 Last words: What is NSDL 

9.1 Related Articles 

NSDL is India’s first and largest depository, where investors’ shares, bonds, debentures, and government securities are stored in electronic form. The main objective behind the establishment of NSDL was that the investor could get rid of the problem of paperwork.

NSDL was the first electronically established not only in India but also internationally. NSDL holds securities in electronic form as compared to paper. With the advent of NSDL, it became very easy and convenient to manage securities.

NSDL Depository is linked to India’s largest stock exchange NSE. The Demat accounts of investors that are opened by the stock broker are opened in the depository itself.

If you understand in simple words, you can understand the NSDL depository like a bank, just as customers’ money is deposited in electronic form in the bank, in the same way, investors’ securities are deposited in electronic form in the depository.

NSDL (NSDL Ka Full Form )

The full name of NSDL is National Securities Depository Limited (National Securities Depository Limited).

When was NSDL established?

NSDL was established on 8 November 1996, NSDL was sponsored by many banks along with NSE. NSDL is promoted by NSE and IDBI Bank. NSDL is the first electronic depository at the international level. The head office of NSDL is located in Mumbai.

Objective of NSDL

• The main objective of NSDL was to store securities in electronic form by eliminating paperwork in the Indian financial market.
• NSDL aims to increase efficiency in the Indian financial market by reducing risk and cost.
• NSDL also aims to support investors and brokers to use the latest technology practices in the Indian Capital Markets.
• The objective of NSDL is to ensure safety and reliability in the Indian financial market.

Work of NSDL

Following are the main functions of NSDL –

• NSDL stores investors’ shares, bonds, debentures, and government securities in electronic form.
• NSDL opens the Demat Account of the investors.
• NSDL maintains records of securities of its clients.
• Managing the daily transactions in the stock market is also one of the functions of NSDL.
• NSDL also does the work of maintaining the record of transactions of shares of its customers.

Advantages of NSDL

Investors get many benefits from opening an account in NSDL, let’s know about them too –

• NSDL provides the facility of instant fund transfer and registration of securities to the investors, which used to take 2 to 4 months before the arrival of NSDL.
• All the information about securities in NSDL is available online so that the investor does not face any kind of hassle.
• With the advent of NSDL, the paperwork has reduced a lot as everything is available online.
• NSDL eliminates all risks associated with physical certificates.
• NSDL gives the facility of nomination to the investors.
• With the advent of NSDL, investors can also trade at a low cost.
• NSDL eliminates errors in paperwork.
• NSDL supplies better communication facilities in the stock market.

Disadvantage of NSDL

With the advent of NSDL, on the one hand, investors got many advantages, on the other hand, it also has some disadvantages.

• In NSDL, all the work is done online, so the chances of fraud can increase.
• NSDL is managed by SEBI as well as by the organization running it.

Common Questions Related to NSDL

Last words: What is NSDL 

NSDL is India’s first electronic depository where investors’ securities are stored in electronic form. The contribution of NSDL in making the Indian capital market computerized is very invaluable and important. NSDL today is India’s largest and most modern technology-less depository.

In this article, we have given you complete information about what is the full form of NSDL, its purpose, functions, advantages, and disadvantages of NSDL. We sincerely hope that you must have got to learn something from this article. In the end, I would like to request you share this article with your friends on social media as well.