A demat account, short for “dematerialized account,” is a type of account used in India to hold securities such as stocks, bonds, and mutual funds electronically, instead of in physical form. The process of converting physical securities into electronic form is called dematerialization.

The account is maintained by a depository participant (DP), who acts as an intermediary between the investor and the depository. By holding securities in a demat account, investors can easily buy and sell securities, as well as track their portfolio’s performance. It also eliminates risks associated with physical certificates such as fraud, loss and damage. Opening a demat account is mandatory for anyone who wants to invest in the Indian stock market.