Central Depositories Services India (CDSL)
2022 NOV 24
Preliminary >
Economic Development > Indian Economy and Issues > Financial market
Why in news?
- Certain services at Central Depositories Services India Ltd (CDSL) were disrupted due to a suspected cyber-attack.
About Central Depositories Services India (CDSL):
- CDSL or Central Depositories Services India Ltd was founded in 1999.
- It is a government-registered share depository alongside its other state-owned counterpart National Securities Depository Ltd (NSDL).
- 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.
About Depository:
- A depository is an organization which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc) of investors in electronic form at the request of the investors through a registered Depository Participant.
- It also provides services related to transactions in securities.
Depository v/s Bank:
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Bank
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Depository
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- Holds Funds in an account
- Transfer funds between accounts on the instruction of account holder.
- Facilitates transfer without having to handle money
- Facilitates safe keeping of money
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- Holds securities in an account
- Transfer securities between accounts on the instruction of the BO account holder
- Facilitates transfer of ownership without having to handles securities
- Facilitates safekeeping of securities
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What are Market Infrastructure Institutions (MIIs)?
- Stock exchanges, depositories and clearing houses are all Market Infrastructure Institutions.
- They constitute a key part of the nation's vital economic infrastructure.
Institutions in India that qualify as MIIs:
- SEBI lists seven stock exchanges (including BSE and NSE), two depositories (Central Depository Services Ltd. and the National Securities Depository Ltd.) and seven clearing houses as MIIs.
PRACTICE QUESTION:
Consider the following statements:
1.In India, it is the central bank that lists an institution as Market Infrastructure Institutions (MIIs)
2. Only stock exchanges are qualified to be listed as MIIs
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer
