What is a demat account?

A demat (dematerialised) account holds your shares and other securities in electronic form, replacing the old system of physical paper share certificates. It’s maintained through a Depository Participant (DP), typically a broker or bank, which itself connects to one of India’s two depositories, NSDL or CDSL, where the actual electronic records are held. Every share you buy for delivery gets credited to this account, and every share you sell for delivery gets debited from it, tracked by a unique demat account number linked to your identity through KYC. A demat account by itself doesn’t let you place buy or sell orders, that’s the role of a separate but linked trading account, so you need both a demat and a trading account working together to actually invest in the stock market.