Financial Performance Evaluation of Depositories in India (A Comparative study of NSDL and CDSL)

Depository is an institution or a kind of organization which holds securities with it, in which trading is done among shares, debentures, mutual funds, derivatives, F&O and commodities. The intermediaries perform their actions in variety of securities at Depository on the behalf of their clients. These intermediaries are known as Depositories Participants. Fundamentally, there are two sorts of depositories in India. One is the National Securities Depository Limited (NSDL) and the other is the Central Depository Service (India) Limited (CDSL). The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. Depositories were setup with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. All leading stock exchanges like the National Stock Exchange, Bombay Stock Exchange, Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange of Ahmedabad, etc have established connectivity with CDSL or NSDL. The paper entitled “Financial Performance Evaluation of Depositories in India” (A Comparative study of NSDL and CDSL) focuses on financial performance of both the depositories i.e. CDSL and NSDL of India. This study is purely based on secondary data and the period of the study is April – 2006 to March – 2011 i.e. five consecutive financial years. Main objectives of the study are (i) To comment on Financial soundness of the depositories during the period under study, (ii) To check Total Expenses to Total Income ratio of both the depositories, (iii) To check Operational Income to Total Income ratio of both CDSL and NSDL during the study period and (iv) To analyze Return on Investment of depositories during the period under review. The scope of the study is limited to Depositories and its profitability during the study period. To check the significance of Hypothesis, one – Way ANOVA has been used as a statistical tool apart from using Mean, Standard Deviation and Co-efficient of Variance.