NSDL was established in 1996 in Mumbai to create a national infrastructure for the electronic settlement of securities using international standards. It maintains investor holdings electronically, facilitates the electronic allotment of IPOs, and allows securities to be used as collateral for loans. Major participants include banks like HDFC, global custodians, and brokers. NSDL reduces paperwork and costs while preventing lost, stolen, or forged certificates to provide benefits for both investors and companies.