What It Means
A demat (dematerialised) account holds your shares and other securities in electronic form, replacing the physical paper certificates investors used before the late 1990s. It's mandatory for trading and investing in Indian stock markets today.
How It Works
A demat account is opened with a Depository Participant (DP) — typically your broker — and is linked to one of India's two depositories, NSDL or CDSL, which are the actual custodians of your holdings in electronic form. It's distinct from a trading account: the trading account is what you use to place buy/sell orders, while the demat account is where the shares you own actually sit. Most brokers today (Zerodha, Groww, Upstox, and others) open both together as a single onboarding flow, but they serve different functions and appear separately on your statements.