Published on Friday, September 7, 2018 by
A lot of investors and traders, particularly those who are new to the trading world think that demat accounts are opened with banks and brokers. However, in reality, banks and brokers are mere facilitators in the demat accounts.
The demat accounts are opened and managed by central depositories. In India, currently there are two depositories NSDL (National Securities Depository Limited) and CDSL (Central Depository Securities Limited).
Every broker offering a demat account is a depository participant with either of the two central depositories and is authorized under the Depositories Act. to act as an intermediary between the central depository and investors.
So, actually you can choose a bank or a broker to open a demat account with but your account will be opened with any of the central depository. It depends on your bank or broker to which depository he is partnered with.
There is not much to choose between NSDL and CDSL in terms of features and facilities offered in demat accounts. The only critical difference can be in the fees charged. The central depositories charge fees from their partner banks and brokers for maintaining demat accounts. This fee is passed onto customers by banks and brokerage companies.
So compare the fee charged by the 2 depositories and then choose a bank or a broker that is partnered with the depository charging low fee.
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