CDSL and NSDL hold every share, bond and fund unit in electronic (demat) form and record every change of ownership.
Keeps the legal record of who owns which securities, through broker and bank 'depository participants'. Earns an annual fee per company listed (issuer charges), a fee each time shares leave an account (debits), account-opening and KYC fees, and e-voting and data services.
It is a two-player utility: every new investor opens a demat account and every sale debits one. CDSL, linked to discount brokers, holds about four in five accounts; NSDL holds fewer accounts but most of the value, because institutions and custodians use it.
Revenue scales with accounts, transactions and listed companies, while costs are mostly fixed technology, so margins are high. Demat accounts reached ~23.4 crore in Jul 2026 (CDSL ~18.8 crore, NSDL ~4.6 crore). Fees are regulated by SEBI, and annual issuer fees give a floor when trading slows.