Depository
An institution that holds securities in electronic form and enables their transfer between accounts.
How it is identified
Test: the entity is registered with SEBI as a depository and maintains securities in dematerialised form for beneficial owners
Unit
qualitative
In depth
India has two depositories, NSDL and CDSL, and every demat account is maintained with one of them through a depository participant such as a broker or bank. The crucial protection is that securities are held in the investor's own name at the depository rather than with the broker, so a broker's failure does not put the holdings at risk — the 2019-2021 broker defaults tested this and the segregation held. Depositories also send holding statements and transaction alerts directly, independent of the broker, which is why reading those messages catches unauthorised transfers. They are infrastructure rather than intermediaries, and they do not advise or trade.
Worked example
A broker collapses overnight. Shares held in the client's demat account at the depository are unaffected and can be transferred to another broker, because the depository's records show the client as the owner.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Depository” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.