Demat account

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.