The National Securities Depository Limited, or NSDL, is the first and one of the two depositories in India, set up in 1996 after the Depositories Act of 1996 made it possible to hold securities in electronic form. A depository works like a bank for shares: it keeps records of who owns which securities and moves them between accounts when trades happen. You do not deal with NSDL directly. You open a demat account with a depository participant, which may be a broker or a bank, and that participant is linked to NSDL or to the other depository, CDSL. When an IPO is allotted, the registrar tells the depositories how many shares each applicant gets, and they credit the shares to the demat accounts. NSDL also provides statements, account monitoring and investor grievance support. Dematerialised holding replaced paper share certificates, which could be lost, forged or delayed, and made transfers much faster and safer. IPO applicants must have a demat account at either depository to receive shares, and the DP ID and client ID printed on the statement must be entered correctly in the application.
Example: You hold a demat account with a broker that is linked to NSDL. When your IPO allotment is final, the registrar sends the data to NSDL, and the shares appear in your holdings.