Many people start their investing journey with stocks or equity mutual funds because they can offer higher returns over the long run compared to plain savings accounts.
You're the Investor. You own the shares (the "ball") and dream of growing your money.
You team up with a Broker cum DP (Depository Participant) – the midfielder on the left. This is usually your stock broker (like Zerodha, Groww, or Angel One). They help you open a demat account (short for "dematerialised account" – a digital vault for your shares, bonds, and mutual funds). You give them instructions to buy, sell, or pledge shares, and they handle the action.
The Broker cum DP is the agent of the investor and as DP also acts as an agent of the depository. Therefore, the depository remains accountable for the conduct
of the DP.
The ball then passes to the Exchange in the middle – the playmaker (like NSE – National Stock Exchange – or BSE – Bombay Stock Exchange). This is where trades actually happen: buyers and sellers match up.
Finally, it reaches the Depository on the right (CDSL – Central Depository Services Limited – or NSDL – National Securities Depository Limited). These are the big safe-keepers. They hold your shares electronically, update records, and ensure everything's secure. India has just these two main depositories.
It's meant to be flawless teamwork – your shares protected no matter what.
But sometimes, a midfielder plays dirty. That's where real-life dramas come in.
Take the case of Daksha Narendra Bhavsar, a widow from Mumbai. Her blue-chip shares worth about ₹86 lakh vanished because her broker, BRH Wealth Kreators (acting as a DP), fraudulently transferred and pledged them without permission.
After years of fighting, on December 1, 2025, the Bombay High Court ruled that CDSL – must compensate her. Why? The law says depositories are strictly responsible for their agents' (the DPs') mistakes or frauds. This "strict liability" protects everyday investors like us.
This win is huge – it could help many others who've been wronged get justice from big depositories.
Sadly, it's not the only foul play. Some big-name brokers have been caught in massive scams by illegally pledging clients' shares to raise loans for themselves:
Karvy Stock Broking: One of the biggest shocks in 2019. They misused shares from lakhs of clients, pledging securities worth over ₹2,000–2,800 crore. It affected around 95,000–250,000 investors!
Other cases include Anugrah Stock Broking and older ones like Allied Financial Services, but Karvy remains the giant red flag.
Demat accounts are safe compared to old paper shares – thanks to strict SEBI (Securities and Exchange Board of India) rules. But pick a reliable broker (check reviews and SEBI registration), monitor your account alerts, and never hand over unlimited power of attorney.
Happy (and safe) investing – score those goals!
Article co-created with Grok AI