Our growth stable, diversified, not reliant on one driver: NSDL MD & CEO

The IPO is crucial for NSDL primarily to meet regulatory shareholding requirements. Meeting these regulatory expectations is of utmost importance to us, says NSDL MD & CEO

India’s largest depository, National Securities Depository Ltd (NSDL), is set to debut on the bourses, two years after it first filed its draft red herring prospectus (DRHP). Ahead of the much-anticipated initial public offering (IPO), NSDL managing director (MD) and chief executive officer (CEO) Vijay Chandok shares insights on the regulatory drivers behind the listing and surge in retail investors. In an interview with Sundar Sethuraman in Mumbai, Chandok addresses questions around competitive pressures from Central Depository Services Ltd (CDSL), new revenue streams and technology challenges. Edited excerpts: 

What is the importance of the IPO for NSDL, and how will things change post-IPO for the company? 

The IPO is crucial for NSDL primarily to meet regulatory shareholding requirements. Meeting these regulatory expectations is of utmost importance to us, and accomplishing this within the stipulated time frame is something we are pleased about. Going forward, our focus will remain on our mission of nation-building, particularly in the growth of India’s capital markets. NSDL has played a pioneering role over the past 30 years, emphasising customer education, safety, trust-building, and inclusion in the capital markets. These continue to be our primary goals after the IPO. 

Why were there multiple delays and extensions in the IPO process? 

The required processes were meticulously followed. Some of these involved bilateral conversations with the regulator. The delays were simply due to adherence to these processes, and now we are at the final stage. Specific details about these processes are confidential and remain between us and the regulators. 

 

How has the post-pandemic period been for demat account growth, and what does the future hold?

 

Covid-19 was a breakthrough period for demat account growth due to a major shift towards digitisation, driven by the pandemic and supported by India’s digital infrastructure (the India Stack). This resulted in a significant change in consumer and investor behavior, leading to a strong surge in account numbers. The compound annual growth rate (CAGR) for the industry reached the mid-20 per cent during this period. Looking ahead, an industry study projects demat account growth to remain in double digits, around 12 per cent for the next few years — a moderation from the previous highs, reflecting market maturity. However, compared to global peers, India still shows under-penetration in financial asset ownership, leaving room for continued growth.

 

CDSL has more demat accounts than NSDL. Why hasn’t NSDL captured more of this growth?

 

We have a highly diversified business model and maintain leadership in several areas of the depository space. Where we trail, we focus on identifying service gaps and winning customers through personalised approaches. Increasing our market share in demat accounts is a business priority.

 

Why is CDSL ahead in terms of profitability?

 

Between 2022 and 2025, growth of demat accounts for NSDL has been 13 per cent, while our competitor saw around 36 per cent growth in the same metric. Revenue growth for NSDL was about 19 per cent, and profit after tax grew by 21 per cent. These are healthy numbers and can be compared with competitors, reflecting stable and secular growth for NSDL.

 

What will be the next big revenue drivers for NSDL?  

 

Our business is closely linked to capital market activity, so as more companies and investors participate in the capital markets and as IPO volumes increase, our revenue will grow. Over the years, we have consistently added new products and adjacent services. However, our growth is stable and diversified, rather than reliant on a single driver. Both the dematerialisation of private company shares and the payments bank business will contribute as India’s financial inclusion and digitisation deepen. 

 

What is the outlook for NSDL’s payments bank business?

 

Payments bank is a profitable business for NSDL, aligned with India’s broader digitisation and financial inclusion goals. As digitisation accelerates, new growth opportunities will continue to arise in this sector.

 

How has NSDL handled recent technology disruptions and glitches?

 

As a technology-driven business, NSDL continually innovates and adds new features. While there were some glitches, these were addressed promptly. Regulatory feedback is taken seriously and used to further improve our systems. 

 

Why has the offer size for the IPO been reduced?

 

Many long-standing original shareholders have decided to reduce their original planned sales, thus lowering the offer size. Other investors chose to hold on to their shares.