Central Depositories Services India (CDSL)
2022 NOV 24
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.
- 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:
- 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
- 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
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.
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