What is a demat account?

A demat (dematerialised) account holds your shares and other securities in electronic form, the way a bank account holds your money. When you buy shares for delivery, they’re credited here; when you sell, they’re debited.

Before demat accounts, shares existed as paper certificates. They could be lost, forged or damaged, and transfers took weeks. Today everything is electronic and settled quickly.

Your demat account is held with a Depository Participant (DP), usually your broker or bank, and the securities themselves are recorded with one of India’s two depositories, NSDL or CDSL.

It can hold shares, ETFs, bonds, government securities, REIT units and mutual fund units. You’ll typically see your holdings with quantity, average price and current value on your broker’s app.

A demat account alone doesn’t let you trade. You also need a trading account to place orders on the exchange; the demat account just stores what you buy. Most brokers open both together. Our post on demat vs trading accounts explains how they work as a pair.

One useful tip: add nominees. As of October 2026, rules allow up to 10 nominees per demat account, introduced in phases from March 2025.

Opening accounts and understanding where your shares sit is covered in the first weeks of our Diploma in Stock Market.