NSDL IPO Simplified: What You Must Know Before Investing

After nearly 2 years of waiting, India’s first and largest depository, National Securities Depository Limited (NSDL), is finally going public.

NSDL was created to replace paper share certificates with digital ones, making buying and selling shares faster, safer, and more transparent.

In this piece, we’re not just going to talk about how much the company is raising or when the IPO opens; you’ll find that easily on any channel.

Here, we’ll go deeper into the business model, the financial strength, and the long-term potential of NSDL.

To understand NSDL’s importance, we need to look at where it all began, when investing meant handling paper certificates.

Why NSDL Matters (The Origin Story)

Until the early 1990s, owning shares in India meant holding physical certificates, actual pieces of paper that proved your ownership in a company. 

Every time someone bought or sold shares, those certificates had to move physically from one person to another. This was a slow and risky process. 

It could take 10 to 14 days just to settle a trade, increasing chances of delays, theft, forgery, or even lost documents.

As India’s markets grew in the 1970s and 80s, with more public issues, rights issues, and bonus shares, the paper trail got longer and more chaotic. 

With the entry of foreign institutional investors (FIIs) and mutual funds in the early 1990s, trading volumes exploded. 

But the systems couldn’t keep up. Stock exchanges struggled with delays, mismatches in signatures, paperwork, and fake certificates.

That’s when India realized it needed a more efficient system, one that was faster, safer, and paperless.

Globally, two systems existed:

• Immobilization: Shares remained physical, but ownership was transferred electronically.
  
• Dematerialization: Physical certificates were destroyed, and shares existed only as digital entries.
  

India chose the dematerialization route. That means when you convert your physical shares to demat form, the old paper gets destroyed, and your ownership gets recorded electronically, just like how your bank keeps track of your money.

It was a game-changer for Indian markets, laying the foundation for the fast, transparent, and tech-driven stock market we know today.

With the rise of digital markets, NSDL evolved from a mere infrastructure provider to a foundational force in India’s financial system.

About NSDL

NSDL is a Securities and Exchange Board of India (SEBI)-registered Market Infrastructure Institution, and it has played a foundational role in India’s shift from physical to digital securities. 

After the Depositories Act was introduced in 1996, NSDL pioneered the dematerialization of securities, making it possible for investors to hold shares electronically in Demat Accounts.

As of March 31, 2025, it is India’s largest depository, managing the highest number of issuers, instruments, and assets under custody. 

Think of it as the digital vault of India’s financial system, safeguarding everything from equity shares and mutual funds to bonds and electronic gold.

With over 65,000 service centres via depository participants, it supports investors, brokers, custodians, and market intermediaries. 

It earns stable revenue through custody and transaction fees. Alongside subsidiaries like NSDL Database Management Limited (NDML) and NSDL Payments Bank Limited (NPB), it continues to innovate and strengthen India’s capital markets ecosystem.

The Core Functions of NSDL

1. Ownership Records & Transfers: NSDL digitally tracks who owns what, from allotment to transfer of securities using advanced tech systems. This reduces paperwork, lowers risks, and makes the whole process faster and cheaper.

2. Asset Safekeeping & Servicing: It holds and manages a wide range of assets in electronic form, ensuring safety and smooth operations through its secure, tech-backed systems.

3. Transaction Services & Extra Features: NSDL makes it easy for investors to hold, move, or pledge their shares securely, all digitally. This includes:

• Converting physical shares to digital form
• Settling buy and sell trades
• Transferring shares between accounts
• Using shares as collateral for loans (pledging)
• Handling company updates like bonus shares or dividends

 Beyond these basics, NSDL also offers helpful tools like:

• e-Voting for shareholders
• A single, combined account statement (called CAS)
• A blockchain-based system to monitor rules for certain bonds and agreements

4. Beyond Depository: Tech & Financial Services: Through its arms NDML and NPB, it also offers e-governance, KYC, digital banking, micro-ATM access, Aadhar-enabled payments, and insurance/mutual fund distribution, especially focused on financial inclusion in rural India.

How NSDL Makes Money?

NSDL earns revenue through a mix of stable annual fees, transaction-based charges, and technology services. 

These revenues come not only from its core depository business but also through its subsidiaries, NDML and NPBL.

Here’s how NSDL makes money:

• Annual Fees: Charged to depository participants and issuers for services like demat account maintenance, software, mutual fund data access, SEZ support, and insurance policy credits.
  
• Custody Fees: Paid by issuers for keeping their securities in dematerialized form on NSDL’s platform.
  
• Registration Fees: One-time fees for onboarding issuers and registrars on the NSDL system.
  
• Transaction Fees: Collected for securities settlement, pledges, corporate actions, e-voting, and policy credits.
  
• Software License and Communication Fees: For providing and maintaining the IT infrastructure used by participants.
  
• Banking Services Income: From NSDL Payments Bank’s services like AePS, micro-ATMs, UPI, prepaid cards, and cash management.
  
• Other Income: Includes training fees and charges for RTA changes.

Having understood NSDL’s core services, revenue, and role in India’s capital market, let’s look at how big its footprint really is.

As of March 31, 2025, the NSDL had:

• Over 3.94 crore active demat accounts across 294 registered depository participants
• Presence in 99.34% of Indian pin codes and 194 countries globally
• A daily average of 15,320 new demat accounts opened in FY25
• A surge in registered issuers from 46,015 in FY24 to 79,773 in FY25
• ₹70.1 lakh crore in assets held for individuals and Hindu Undivided Families, nearly 68% of total demat assets
• ₹4.67 lakh crore in assets held for Non-Resident Indians, covering 85.6% of their demat holdings
• Nearly 97% market share in dematerialized debt securities by value

Now that we understand how NSDL makes money and its scale, let’s dive into how strong those numbers really are.

NSDL Financials Performance

Let’s take a closer look at the financials:

NSDL’s strong revenue and profit CAGR of ~18.5% and ~22% between FY23–FY25, along with improving operating margins and rising ROE, reflect a solid, scalable business model. Its EPS has grown consistently, reflecting strong and sustained profitability.

NSDL’s strong financials come from robust growth in transaction and custody fees, increased activity from IPOs and unlisted issuers, and steady income from subsidiaries like NPBL and NDML. 

Its stable cost structure, rising e-voting and margin pledge revenues, and improving associate performance further boost profitability and operational efficiency.

While NSDL’s financials reflect stability and steady growth, it’s the company’s strong foundation, technological leadership, and market trust that truly set it apart. 

Impressive numbers aside, the big question now is: what’s in this IPO for you, and why is NSDL going public at all?

NSDL IPO: What You Need to Know

NSDL is coming up with an Offer for Sale (OFS), meaning the company is not raising any fresh capital; instead, existing shareholders are selling part of their stake.

Here’s more information:

But Why is NSDL Going Public?

NSDL’s IPO isn’t about raising fresh capital; it’s about three key things:

• To list its shares on the BSE, one of India’s premier stock exchanges
  
• To increase its visibility and brand recognition in the market
  
• To create a public market for its equity shares

Today, it stands as the largest depository in the country in terms of the number of issuers, active instruments, and assets under custody. As India’s capital markets evolve and digital participation grows, NSDL sees the perfect opportunity to go public.

And here’s the important part:

As per SEBI’s depository regulations, no shareholder can hold more than 15% stake in a depository company. Currently,

• IDBI Bank holds 26.10%
  
• NSE holds 24.00%

Both exceed the 15% limit, so they must reduce their holdings to comply with SEBI’s rules.

Before you decide to apply, it’s important to understand what sets NSDL apart from its peers.

What Sets NSDL Apart?

• Market Leadership: As the highest number of issuers, securities, and total assets under custody, crossing ₹500,000 billion as of September 2024. It helped shift India’s markets from paper-based to digital.
  
• Faster Settlements: NSDL played a key role in moving India to faster trade settlements, first to T+1 in 2023, and now implementing T+0 for top stocks in 2025. It also introduced UPI-based payment blocks and direct payouts.
  
• Strong Network: With over 39.45 million active demat accounts and 65,000+ service centres, NSDL supports investors across 99% of India’s pin codes and in 194 countries.
  
• Technology-Focused: Platforms like Speed-e and IDeAS help investors transact and view holdings easily. It also uses blockchain, real-time alerts, and a secure data platform.
  
• Cyber-Security Ready: NSDL uses advanced systems like 24×7 monitoring, encryption, firewalls, and data vaults to protect investor information and prevent cyber threats.
  
• Stable Income Model: Most of NSDL’s revenue comes from annual fees, making it less dependent on market ups and downs. In FY25, recurring income stood at ₹2,795 million.
  
• Diverse Asset Holdings: NSDL accounts hold not just shares, but also mutual funds, bonds, government securities, and even digital gold, offering investors one place for all holdings.
  
• Beyond Depository Services: Through NDML, it supports SEZ approvals, e-KYC, and insurance records. NSDL Payments Bank offers micro-ATMs, UPI services, and distributes mutual funds digitally.
  
• Experienced Team: Led by a team with decades of industry experience, NSDL has consistently focused on innovation, compliance, and investor trust.

But NSDL doesn’t operate in a vacuum; let’s compare it to its closest competitor, CDSL is Central Depository Services (India) Limited (CDSL).

NSDL vs. CDSL: A Detailed Comparison

In Simple Words: NSDL is like the first-born – bigger, more experienced, handles huge accounts, and does a lot behind the scenes for big institutions.

Like any investment, NSDL isn’t risk-free. Here are the key risks you should consider before hitting apply.

Risks Investors Should Consider

NSDL outlines several critical risks that investors must weigh before investing in its IPO. These risks fall into three buckets: internal business challenges, external macro/regulatory headwinds, and IPO-specific risks.

Internal Business Risks

• Dependence on Market Activity: NSDL’s revenue heavily depends on trading volumes and investor activity. A slowdown in the securities market or a shift in investor preferences could impact transaction fees and overall income.
  
• Cybersecurity & Tech Disruptions: NSDL relies on advanced IT infrastructure. Any disruption, whether from cyberattacks, system failures, or security breaches, can harm operations, lead to regulatory penalties, and damage its reputation.
  
• Intense Competition from CDSL: NSDL faces stiff competition from its rival CDSL. Losing market share due to better pricing, tech, or service from competitors could impact growth and profitability.
  
• Regulatory Compliance Burden: Operating under strict SEBI, RBI, and other regulatory bodies, non-compliance or regulatory action can lead to fines, restrictions, and reputational damage.
  
• Risks from Subsidiaries: NSDL’s subsidiaries, like NSDL Payments Bank and NDML, face financial losses, operational hurdles, and high compliance costs that could strain group-level performance.

External Environment Risks

• Macro & Policy Uncertainty: NSDL is exposed to India’s economic cycles, inflation, rate changes, and political shifts, all of which can affect trading volumes and revenues.
  
• Evolving Regulation: Frequent changes in tax and corporate laws (like the Income Tax Bill 2025) demand swift compliance adaptation or risk non-adherence.
  
• Sovereign Ratings & FDI Limits: A downgrade in India’s credit rating or tight FDI rules could affect investor appetite and capital inflows.
  
• Competition Law: NSDL and NDML have faced antitrust proceedings before. Future violations could mean steep fines and reputational harm.
  
• Public Company Obligations: As a listed entity, NSDL may face shareholder pressure and restrictions on equity transfers, influencing strategic decisions.

IPO-Related Risks

• No Fresh Capital for NSDL: As a 100% Offer for Sale (OFS), proceeds go to existing shareholders, NSDL won’t receive any new capital from this IPO.
  
• Lack of Trading History: The stock has no prior listing track record. Post-IPO liquidity, valuation, and volatility remain uncertain.
  
• Limited Shareholder Rights: Indian corporate law offers narrower protections compared to global standards. Future equity issuances may dilute existing holdings.
  
• Inflexibility for Investors: Institutional and retail investors face restrictions on bid withdrawals, exposing them to market swings between bidding and allotment.

Conclusion: Should You Invest in NSDL IPO?

NSDL is the silent backbone of India’s financial market, ensuring that buy and sell happen smoothly.

From eliminating paper shares to powering the digital investing experience, it has transformed the way India invests. 

Through this piece, we’ve broken down its story, strengths, financials, and even the risks. We’ve tried to present one level simpler, so you can stay informed and think intelligently, without rushing into any financial decision.

Because in the end, whether you choose to invest or not depends on your own risk appetite and investment objectives.