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Depository | January 20, 2021

What is the Admission Criteria to become an NSDL business partner?

NSDL carries out its activities through below mentioned functionaries known as “Business partners”

·         Depository Participants (DP)

·         Issuer Companies

·         Registrar and Share Transfer Agents

·         Clearing corporations / Houses of the stock exchanges

These entities need to be amalgamated into NSDL’s depository system in order to provide services to the clearing members & investors.

Depository Participants (DP)

To obtain depository services via Depository Participant of NSDL, an investor needs to open a depository account which is similar to opening a bank account to avail banking services. DPs, as per SEBI guidelines could be organisations which are into providing financial services like banks, custodians, financial institutions, brokers etc. The admission of DPs involves a comprehensive assessment by NSDL and a further evaluation and approval by SEBI.

As per SEBI (Depositories & Participants) Regulations, following are the categories that are eligible to become DPs -

 ·         A public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956)

·         A bank included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934)

·         A foreign bank operating in India with Reserve Bank of India approval

·         A state financial corporation established under the provisions of section 3 of the State Financial Corporations Act, 1951 (63 of 1951)

·         An institution engaged in providing financial services, promoted by any of the institutions mentioned above jointly or severally

·         A custodian of securities who has been granted a certificate of registration by the Board under sub-section (1A) of section 12 of the Act

·         A clearing corporation or a clearing house of a stock exchange

·         A stock broker who has been granted certificate of registration by the Board under sub-section (1) of section 12 of the Act.

·         A non-banking finance company, having a net worth of not less than rupees fifty lakhs

·         A registrar to an issue or share transfer agent who has a minimum net worth of rupees ten crores and who has been granted a certificate of registration by the board under sub-section (1) of section 12 of the Act.

NSDL as empowered by Regulations is allowed to set its own selection criteria in the Bye Laws. Therefore, the applicants must also adhere to the following admission criteria stated in NSDL Bye Laws

·         Applicants in the category of stock broker should possess a minimum Net-worth of Rs. Three crore. In case of an NBFC and a registrar to an issue or share transfer agent, minimum net-worth as specified in the SEBI Regulations will apply.

·         The applicant should not have been found guilty in any of the five years immediately prior to the filing of the application in any manner involving embezzlement of funds & securities, fraudulent conversion or forgery.

·         The applicant should not have been expelled, declared ineligible or disqualified by SEBI, self-regulatory organisation or any stock exchange. Provided however that, if a period of three years or more has passed since such punishment was levied, the Depository may consider such application.

·         The applicant shall be required to provide information and details of his business history including the background and experience of directors and promoters of the applicant.

Issuer Companies

An issuer offers demat facility to its stakeholders by admitting the securities in NSDL. Issuer need to obtain electronic connectivity with the existing Registrar & Transfer Agent (R&T Agent) or by having In-House connectivity with NSDL.

Who can apply?

Practicing professionals who are registered member of ICAI, ICSI and ICWAI can register on Issuer Portal to provide the facility of Issuer Admission in NSDL to their client companies.

SEBI Registered R&T Agents who have established electronic connectivity with NSDL can register on Issuer Portal and provide the facility of Issuer Admission in NSDL to their clients.

An issuer needs to submit the required documents which include letter of intent & financial documents to NSDL for the past two years.

Thereafter, Tripartite Agreement needs to be executed between Issuer, R&T and NSDL

Registrar and Share Transfer Agents.

Admission Criteria:

The applicant shall be SEBI registered & conduct activities as a registrar to an issue & share transfer agent or should be carrying on activity as a registrar to an issue or as a share transfer agent.

The above criterion is not applicable in case he intends to carry out electronic share registry operations in-house.

  Clearing Corporation

Clearing Corporation of stock exchange shall be accepted as business partners on the basis of below criteria.

·         Clearing Corporation should be capable & should operate in accordance with settling payments against deliveries or guarantees.

·         It should be capable of providing services related to clearing & settlement of transactions related to securities which are submitted in dematerialized form to Depositories.

·         In respect to its operation in relation to the Depository, CC should co-operate at all times in grievance redressal of Clients & Participants.

·         The software & hardware systems CC possesses should be adequate to interact with the Depository as specified in the Business Rules.

The below stock exchanges have linked up with NSDL to aid trading and settlement of dematerialised securities:

BSE Limited

Metropolitan Stock Exchange of India Limited

National Stock Exchange of India Limited (NSE)

Depository Form

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Important Message The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

Attention Investors
  • 1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  • 2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  • 3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
  • 4. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.
  • 5.Investments in securities market are subject to market risks, read all the related documents carefully before investing.
  • 6.The securities are quoted as an example and not as a recommendation.
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries forrefund as the money remains in investors account.
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDLon thesame day.....issued in the interest of investors.
KYC is a one-time exercise while dealing in securities markets-once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. | (As instructed by SEBI, We hereby declare that we do engage in proprietary trading in all segment across the exchange.)
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