As more people start investing in the stock market, the first signs show up not in trading volume data, but in the depository system. India has two major players, CDSL (Central Depository Services (India) Limited) and NSDL (National Securities Depository Limited), acting as the backbone of the entire equity ecosystem. They hold, transfer, and settle securities seamlessly.
When retail participation grows, depository companies tend to grow as well since every trade, account, or corporate action passes through these systems. Let’s know more in this blog.
Why retail participation fuels depository growth?
Any investor wanting to buy or sell shares needs a “demat account”. Now, whether you open an account through a discount broker or a traditional full-service one, the shares eventually sit with either CDSL or NSDL. Which is why when retail participation rises, one of the first metrics that changes is the number of new Demat accounts.
In the last 5 years, the number of demat accounts in India has surged from around 4 crores to more than 21 crores as of October 2025. Nearly a lakh new demat accounts are being opened every day, highlighting the rise in investor participation. This rise can be attributed to the availability of better and more trading platforms, personal finance literacy, the appeal of equities as long-term wealth creators and broader market factors such as FII DII data that often shape investor sentiment.
Depository companies benefit directly from this, as they earn fees from account maintenance, transactions and other services tied to these accounts. The income of Indian depositories has grown at 22.4% CAGR since FY2018, hitting ₹1,700 crores in FY2025. This can balloon to ₹2,100-2,200 crore by FY2027 if regulatory pricing doesn’t change.
India’s largest depositor, NSDL, reported a profit of ₹343 crores in FY2025, up from ₹275 crores the previous year. CDSL, too, has grown impressively, posting profit growth upwards of 20% in the last 3 years. CDSL share price is also up- more than 450% since December 2020, reflecting how rising participation directly boosts confidence in depository businesses.
While NSDL holds the lion’s share of assets under control (about ₹464 trillion), CDSL has more demat accounts thanks to lower costs and faster account openings.
But it’s not just new accounts that grow depository companies. Increased activity also helps.
How retail activity impacts depository revenues
Depository companies act as the fundamental infrastructure of the equity ecosystem. So, if more people are using the system, the infrastructure gains more value. This means higher revenue, stronger cash flows, and finally, higher profits.
Retail investors also tend to be more active in a trending market, especially if it’s in a bullish phase. There are more trades conducted, more settlements, and more use of the depository system. Even though depositories don’t charge per trade as brokers do, they still benefit from the increased activity in the system. With each IPO application, dividend distribution, rights issue, e-KYC and other compliance services, depositories rake in revenue.
Long term structural benefits for depositories
Once a demat account opens, it usually stays active for years, even if there may not be much trading activity. But annual maintenance fees still apply regardless of the volume traded. As more demat accounts are created, depositories get stable revenue for years.
Furthermore, as more investors enter the system, the need for innovation also increases, allowing depositories to create new revenue streams such as e-voting, and digital pledge systems. NSDL also has a banking arm, and a database service that contribute to its overall revenue. These improvements and extra services, in turn, strengthen the depository infrastructure and improve customer experience.
Conclusion
When you have more individuals in the stock market, the demand for depository services naturally rises. It points to the increasing financial maturity of the country.
More participation means more households are looking to build wealth rather than just relying on traditional savings options.
For depositories, it creates a long-term growth runway and for the markets, it brings more liquidity, stability, and depth.
