If you’re a stock market trader in India, you’ve likely come across a frustrating message at least once: “CDSL Authorization Failed. Please Try Again.” Now, this simply means that CDSL is not working due to one of the other technical glitches.
But for retail investors, such a disruption isn’t just a minor technical error; it can mean missed profits, failed exits, and lost trust.
Let’s unpack what happens when CDSL stops working, how it affects your trading, and walk through a real-world example when such glitches disrupted a large chunk of the Indian retail trading system.
What Is CDSL and Why Does It Matter?
CDSL (Central Depository Services Limited) is one of the two central depositories in India. It holds your stocks in dematerialized form and facilitates the transfer of securities during trades.
If you want to sell shares, your broker must obtain authorization from CDSL, usually through:
- TPIN + OTP (e-DIS)
- Or, if you’ve signed DDPI (Demat Debit and Pledge Instruction), no manual authorization is required.
So, when CDSL’s systems go down, your broker is unable to complete the final step of a sell order, leaving your trades stuck, even if everything else is working perfectly.
CDSL Authorization Not Working
Now there are many cases, one of the biggest ones was in 2021 when the CDSL sell authorization was not working.
Here is that one case that shook the stock market and some others that were witnessed at different time.
1. October 18, 2021 – Sell Orders Blocked Across Brokers
A technical glitch at CDSL prevented TPIN-based sell authorizations. This affected users across Zerodha, Upstox, Groww, ICICIdirect, and Paytm Money.
Many investors couldn’t execute exit orders until the afternoon.
Impact on retail traders:
- Zerodha and Paytm allowed TPIN-less sell orders temporarily, cautioning customers to double-check holdings
- Missed exit opportunities, especially in volatile stocks.
- Reports of panic selling once the service resumed.
2. November 17–20, 2022 – Intermittent Downtime; Settlement & Holding Data Delayed
CDSL intermittently isolated its systems, citing security measures, causing severe service disruptions.
Dealing brokers included Upstox, Angel One, and others.
Impact on retail traders:
- MTF (Margin Trading Facility) authorizations and pledging/unpledging of shares were delayed.
- Mutual fund redemption orders failed to register in the demat accounts.
- Funds withdrawals experienced delays.
- Portfolio P&L and holding values were frozen, misleading investors about their real-time positions.
- MTF-driven positions risked forced squaring off due to outdated margin metrics
3. February 12, 2024 – TPIN Reset Halted; Sell OK If TPIN Known
Zerodha reported a CDSL glitch that blocked clients from resetting their TPINs.
The fix came later in the morning.
Impact on retail traders:
- New or tired investors are unable to reset TPIN, blocking them from setting up fresh sell orders.
- Traders who already remembered their TPIN could continue selling, but new participants remained locked out.
- This created an accessibility hurdle and risk of idle capital during crucial trade windows.
4. November 18, 2022 – Cyber‑Attack & Shutdown Affects Margin Services
On discovering malware, CDSL proactively shut down its systems late Friday.
By Monday, brokers like Upstox restricted margin trades, unsettled pledges, and paused services like fund pay-in/pay-out.
Impact on retail traders:
- MTF positions frozen until CDSL guarantees back-office stability.
- Pending pledges/unpledge requests were delayed, restricting leverage using existing holdings.
- Mutual fund redemption and settlement delays created liquidity issues for short-term planned withdrawals.
- Risk of margin shortfall or forced square-offs if resolution dragged on.
What Should You Do If CDSL Isn’t Working?
When CDSL is not working, it does not have a direct impact on your capital, but it leads to losses due to price movement or margin issues as it blocks the ability to complete sell transactions.
And if you are into intraday and high-frequency traders, even a 30-minute delay can destroy a well-planned strategy.
So, it is always better to stay prepared and act smartly if you face similar issues:
1. Check Broker Announcements: Go to your broker’s bulletin board or Twitter/X handle. If multiple traders are impacted, brokers usually issue a clarification within minutes.
2. Understand It’s a Backend Issue: If your buy orders are working fine but sell orders are failing, the issue likely lies in CDSL’s authorization API, not your internet or the broker.
3. Use TPIN-Free Alternatives (If Offered): Some brokers allow TPIN-less sell orders during disruptions, especially if your holdings were previously authorized. Use this carefully and double-check positions post-trade.
4. Enable DDPI (Demat Debit & Pledge Instruction): This is the most reliable solution. With DDPI activated, your broker can debit shares from your demat account without requiring TPIN/OTP for every sale. No TPIN = no dependency = no disruption.
How You Can Protect Yourself
Here are 5 simple steps to stay protected and avoid disruption:
1. Enable DDPI
The best long-term fix is to enable Demat Debit and Pledge Instruction (DDPI). This allows your broker to debit shares directly from your demat account, without requiring TPIN every time.
Think of DDPI as giving your broker a signed cheque. TPIN is like asking you for OTP every time.
2. Use Broker Workarounds
Some brokers allow sell orders without TPIN when CDSL is down (temporarily). Use it carefully, and only for holdings you trust.
3. Watch for Updates on Twitter/X
Brokers usually update outages on their official Twitter handles within minutes. Follow Zerodha, Upstox, Groww, and CDSL for real-time information.
If your orders are stuck for hours and there’s no resolution from CDSL, then you can raise this issue in SCORES.
Need help? Register with us, we have helped several traders who lost their money in one or the other technical glitches in stock market and helped recover more than ₹4 crore in total to date.
5. Keep Screenshots & Records: For future disputes or refund claims, keep screenshots of order failures, time stamps, and broker responses.
Conclusion
“CDSL not working” may sound like a technical blip, but for retail traders, it can be the difference between profit and panic.
Being prepared with tools like DDPI, staying informed during market hours, and understanding that your broker isn’t always to blame are the key lessons from past incidents like October 18, 2021.
In a fast-moving market, the ability to act quickly is everything. And when infrastructure fails, the prepared traders survive better than the rest.
