A Demat account enables you to electronically hold your securities such as stocks and bonds. There are two depositories in India that provide such services; Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). It is similar to a bank account but a Demat account is used to store securities in electronic form. When you place a buy / sell order for a security, it gets automatically credited/debited to/from your Demat account, given that the basic requirements are fulfilled. This allows you to trade without needing to physically transfer share certificates as it was done before the introduction of the Demat account. It expedites transactions and reduces costs.