A Demat account, short for ‘dematerialised’ account, is an electronic account used to hold shares, bonds, and other securities in digital form, rather than as physical paper certificates. It functions somewhat like a bank account, but instead of holding money, it holds your investments in stocks and certain other securities, keeping track of exactly what you own and in what quantity.
A Demat account is mandatory if you want to buy or sell shares on the Indian stock exchanges, and it's usually opened alongside a linked trading account through a stockbroker or brokerage app. It's worth noting that mutual fund units don't strictly require a Demat account — they can be held either in Demat form or in a simpler statement-based (non-Demat) format, depending on how you choose to invest.