NSDL IPO opens today: How Harshad Mehta scam led demat revolution in India

From the 1992 Harshad Mehta scam to its public listing in 2025: How NSDL helped modernise and build the dematerialised capital market ecosystem in India

Don't want to miss the best from Business Standard?

India’s financial markets were shaken to their core in 1992 when the Harshad Mehta scam came to light, exposing systemic vulnerabilities in the country’s trading and settlement systems, leaving a trail of mistrust that would take years to repair. Out of that crisis came reform, through which institutions were formed. One such institution is the National Securities Depository Limited (NSDL), established in 1996.

 

On Wednesday, nearly three decades on, NSDL opened its initial public offering (IPO), marking a significant milestone for the institution that helped modernise India’s equity markets.

 

What was the Harshad Mehta Scam 1992?

The Harshad Mehta scam in 1992 remains one of the most significant financial frauds in India. Mehta, a stockbroker, manipulated the stock market using loopholes in the banking system. He diverted these funds (meant for interbank transactions) to buy stocks in huge volumes, artificially inflating their prices. For example, stocks like ACC rose to ₹9,000 from ₹200 in a short span. According to a report by Motilal Oswal, at the time, Mehta’s net worth was believed to be more than ₹5,000 crore (more than ₹30,000 crore today).

 

When the scam was discovered, the stock market crashed, leading to a loss of over ₹4,000 crore (equivalent to tens of thousands of crores today, adjusted for inflation). It shattered public trust in financial markets but also forced reforms that made investing safer and more transparent.

 

NSDL: Bringing structure, transparency to markets

NSDL was established in August 1996, shortly after Parliament passed the Depositories Act. At the time, India’s capital markets still ran on physical share certificates. Trades were slow, costly, and prone to fraud. Investors were susceptible to receiving forged or duplicate certificates, or none at all.

 

NSDL was the first to offer dematerialisation, or demat accounts — a process that allows shares to be held and transferred electronically. It eliminated paper-based risks and brought new levels of transparency, safety, and efficiency to trading. Much like a bank account holds money, a demat account now holds securities in digital form.  ALSO READ | NSDL IPO vs CDSL Shares: Here's what key numbers reveal for investors

NSDL by the numbers

• 40.4 million active client accounts
• 99.35 per cent of India’s PIN codes reached
• 100 billion+ physical certificates eliminated
• 5,600+ accounts opened per day (average since inception)

What is a demat account?

A demat account, short for dematerialised account, allows investors to hold financial securities such as shares, bonds, and mutual funds in electronic form instead of physical certificates. Much like a bank account holds money, a demat account holds securities.

 

When an investor buys shares, they are credited to the demat account; when shares are sold, they are debited. The account is maintained by a depository (like NSDL or CDSL) through intermediaries known as Depository Participants (DPs)—these are typically banks, brokers, or financial service firms. 

NSDL vs CDSL

NSDL is one of two central depositories in India. The other is Central Depository Services (India) Ltd (CDSL), which was set up in 1999.

 

Both institutions perform the same core functions — enabling dematerialisation of securities and facilitating electronic settlements. However, their operating models and customer bases have evolved differently. NSDL has traditionally served large institutions and custodians, while CDSL’s growth has been driven by retail participation, often through online trading platforms and newer brokerage models.

 

NSDL currently holds a majority share of the value of dematerialised assets in India, with its total value of securities under custody estimated to exceed ₹460 trillion, data from public filings show.

 

By contrast, CDSL, though more retail-focused, has a significantly higher number of investor accounts, currently over 158 million.

 

While CDSL has been listed since 2017, NSDL’s public debut is seen as long overdue. Analysts believe the timing is favourable, given the growth in domestic market participation and India’s shift to faster settlement cycles (T+1). 

 

NSDL IPO details

The ₹4,011.60 crore offer is entirely an offer for sale (OFS) by existing shareholders, with no fresh capital being raised. Priced in the range of ₹760 to ₹800 per share, the IPO will close on August 1. The minimum application size for retail investors is one lot of 18 shares, or ₹14,400.

 

NSDL IPO at a glance

IPO Opens → July 30

IPO Closes → August 1

Allotment date →  To be finalised on Monday, August 4, 2025

Listing date → Wednesday, August 6, 2025 (tentative)

 

For investors, the listing offers access to a market infrastructure business that plays a behind-the-scenes role in every equity transaction. And for the institution itself, the public debut marks a new phase — one that builds on its legacy of bringing structure, reliability, and trust to India’s capital markets.