NSDL is the first Depository in India, which was established under Depositories Act in the year 1996. The purpose of setting up of NSDL is to remove the hindrances of physical transfer of securities and convert the physical transfers of securities into the electronic form (demat).
NSDL performs their functions through depository participants.
They are:
Dematerialisation:Dematerialisation is the
conversion of physical certificates into ‘demat’ holdings at the request of
investors.
Rematerialisation: the conversion of
dematerialized holdings back into physical certificates is called
rematerialisation.
It receives the securities of depository participants.
It maintains investor holdings in the electronic form
Effects settlement of securities traded on the exchanges
Transfer of securities
Pledging of dematerialized securities
Electronic credit in the public offerings of companies
Bonus and rights issues shares accepted in the form of electronic