Capital Markets: Challenges and Developments

CDSL: India’s registered share depository

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CDSL

Mains level : NA

Certain services at CDSL (Central Depositories Services India Ltd) were disrupted due to a suspected cyber-attack over the weekend.

What is CDSL?

  • CDSL, or Central Depositories Services India Ltd, is a government-registered share depository, alongside its other state-owned counterpart National Securities Depository Ltd (NSDL).
  • It was founded in 1999.
  • It is a Market Infrastructure Institution or MII that is deemed as a crucial part of the capital market structure, providing services to all market participants, including exchanges, clearing corporations, depository participants, issuers and investors.
  • Share depositories hold shares in an electronic or dematerialised form and are an enabler for securities transactions, playing a somewhat similar role to what banks play in handling cash and fixed deposits.
  • While banks help customers keep their cash in electronic form, share depositories help consumers store shares in a dematerialised form.

Functions of CDSL

  • CDSL facilitates holding and transacting in securities in the electronic form and facilitates settlement of trades done on stock exchanges.
  • These securities include equities, debentures, bonds, Exchange traded Funds (ETFs), units of mutual funds, units of Alternate Investment Funds (AIFs), Certificates of deposit (CDs), commercial papers (CPs), Government Securities (G-Secs), etc.

 

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