Central Depository Services Limited or CDSL is one of the only two central security depositories in India. As a market infrastructure institution, CDSL facilitates the holding, transaction and settlement of securities in electronic format to boost operational efficiency and security. It serves exchanges, clearing corporations, depository participants, investors and issuers across India. Founded in the year 1999, CDSL entered the capital markets ecosystem as a competitor to India’s first depository, National Securities Depository Limited. CDSL is currently the largest depository in India, with a share of 73% of the demat accounts active in India. Even if you are a trader or investor and heard about CDSL, do you know much about CDSL’s revenue streams or its importance in the Indian capital markets? It not, then the following information is for you.
What Are The Functions of CDSL?
CDSL provides a number of core depository services. These include dematerialisation and rematerialisation of securities, opening and maintenance of demat accounts offered to the clients by its depository participants and holding, transfer, pledge, nomination and transmission of securities like equities, bonds, mutual funds, treasury bills and others.
CDSL processes all the delivery and receipt instructions for all the orders received from a depository participant’s terminal. Transaction support also includes settlement of trading orders, settlement of accounts and facilitating both market and off-market transfers.
CDSL provides a number of digital tools for various services like e-voting, m-voting, e-locker, e-notices, Myeasi mobile app and electronic consolidated account statements.
Other offerings of CDSL include electronic foreign investment monitoring, system-driven disclosures, virtual AGMs and educational initiatives for the investors.
| Company | Central Depository Services Limited |
| Establishment Year | 1999 |
| Founder/Owner | BSE and other shareholders |
| Headquarters | Mumbai, Maharashtra, India |
| Industry | Depository Services |
| Net Worth | $4 billion |
| Revenue In 2024 | $130 million |
How Does CDSL Make Money?
1. Transaction Charges
CDSL earns revenue from charges on transactions involving selling, purchasing, transferring and pledging of shares or units. Transaction charges are fixed amounts that the depository participants pay to CDSL. The charges are basically paid by the investors or traders and the DPs simply collect and deposit the same with the depository.
Transaction charges account for around 40% of CDSL’s total revenue. In FY 24, the transaction fee ranged between INR 11.50-13.50 per debit transaction.
2. Annual Issuer Charges
CDSL earns revenue from annual issuer charges. This is a recurring fee that is paid by each and every listed company or mutual funds in accordance with SEBI guidelines. Companies pay annual issuer charges to manage their listed shares electronically deposited with the CDSL.
Annual Issuer Charges contribute around 22-25% to the total revenue earned by CDSL. The exact amount paid by a company depends upon the number of demat accounts holding its shares.
3. IPO and Corporate Actions Charges
CDSL earns revenue from fees paid by companies opting for an IPO to list their shares for potential investors. Furthermore, the depository also receives payments from the companies for other corporate actions like bonus, rights, buyback, splits, OFS and more.
IPO and corporate action charges account for around 15% of the revenue earned by CDSL. The charges range between INR 20,000 to over INR 1 lakh per event.
4. Other Revenue Sources
While the above three revenue streams make up the bulk of CDSL’s earnings, there are some other segments yielding around 20% of the revenue. These include settlement charges to settle trades daily, e-voting charges, document storage charges, KYC charges, ECAS charges and charges on miscellaneous services like SMS alerts, APIs and others.
An Overview of CDSL’s Technology Infrastructure
CDSL deploys a centralised system which allows current data to be accessed by the users in the shortest possible time. The system is easily accessible through internet or intranet after multi-factor user authentication and log-in. High-tech software infrastructure is supported by state-of-the-art hardware, including network infrastructure, servers and enterprise flash storages. Apart from being robust and reliable, the hardware resources are highly scalable to meet the requirements of an increasing number of users.
CDSL is a recipient of the ISO 22301 certification for its Business Continuity Management System or BCMS. It carries out numerous system control processes to maximise the effectiveness of its BCMS. Furthermore, CDSL designs and implements world-class cybersecurity policies and practices to protect sensitive and confidential data.
