A demat (dematerialized) account is an electronic account that holds your securities — stocks, bonds, mutual funds, ETFs, and government securities — in digital form. Just as a bank account holds your money, a demat account holds your investments.
Before dematerialization, investors held physical paper certificates for every share they owned. These could be lost, stolen, damaged, or forged. India introduced demat accounts in 1996 through NSDL and CDSL, and today over 150 million demat accounts are active.
Opening a demat account is mandatory for trading stocks on Indian exchanges (NSE/BSE). Brokers like Zerodha, Groww, and Upstox offer free or low-cost demat accounts. Annual maintenance charges range from zero to Rs 300-750. When you buy shares, they are credited to your demat account; when you sell, they are debited.