Demat account
A Demat account is an electronic account that holds shares and securities in digital form instead of physical certificates.
A Demat (Dematerialized) account works like a bank account, but instead of holding money, it holds shares, bonds, ETFs, and mutual fund units electronically.
Key points:
Mandatory for applying to IPOs and trading on stock exchanges in India
Opened through a broker or depository participant (DP)
Linked to two depositories in India: NSDL and CDSL
Allotted IPO shares are automatically credited to this account
Example:
When you apply for an IPO and get shares allotted, those shares are credited directly to your demat account rather than issued as paper certificates.