A Demat account (“Demat” = dematerialized) is an electronic account that holds the shares and other securities you own, in digital form. It replaced the older system of physical paper share certificates, which were slow to transfer and prone to loss, damage, or forgery.
Key Idea
A Demat account is a storage account — it holds what you already own. It’s different from a trading account, which is used to place buy/sell orders. See the full comparison in What Is a Demat and Trading Account?.
Example
When you buy 1 share of a company, that share is credited to your Demat account after the trade settles (typically the next working day in India). When you sell it, the share is debited from your Demat account.