What is a demat account?
A demat account is like a bank account but for your shares and assets. It allows you to safe-keep your shares, IPOs, exchange-traded funds, bonds, NCDs, mutual funds and government securities in electronic form.
You trade shares, which means buy and sell stocks, through your trading account and they are stored electronically in your demat account. Earlier, individuals had to hold physical share certificates and send them physically to the broker for settlement. But now all transactions and settlement of stocks happen electronically through a demat account.