As of March 2025, there are over 192.4 million demat accounts in India, reflecting the growing trend of electronic trading and asset management. A demat (short for dematerialised) account allows individuals to store their securities digitally and simplifies trading, investing, and portfolio management. However, not all types of securities can be held in a demat account.
Having said that, let’s explore what securities can be stored in your demat account and what can’t be.
What you can hold in a demat account
Look at the key securities you can keep in your demat account hassle-free:
Equity shares or stocks
These are the most commonly held securities in a demat account. When you buy shares of companies listed on stock exchanges in India, they are credited to your demat account.
Bonds and debentures
Both government and corporate bonds are eligible for dematerialisation. These bonds, once held in your demat account, provide a simple way to track interest payments and changes in market value and even sell or transfer them electronically.
Mutual funds
Instead of holding physical units, your mutual fund investments are credited electronically to your demat account. This enables you to track, review, and manage them without any hassle.
Exchange-Traded Funds (ETFs)
An ETF is a marketable security that tracks specific indices or assets, like gold or a stock index. They trade on stock exchanges just like stocks and are held in your demat account. ETFs provide an affordable way to build a diversified portfolio.
Government Securities (G-Sec)
These debt instruments are issued by the government to raise funds for various purposes. These securities can be easily held and traded through your demat account, offering a safe and low-risk investment option.
Sovereign Gold Bonds (SGBs)
These bonds are backed by the government and denominated in grams of gold. They offer investors an opportunity to gain exposure to gold without physically holding it.
What you generally can’t hold in a demat account
Some common securities you cannot hold in a demat account are:
Unlisted shares
Unlisted shares of private companies are generally not held in demat form unless the company has registered with a depository to enable dematerialisation. However, once the company goes public through an Initial Public Offering (IPO), these shares can then be converted to demat form.
US stocks
You cannot hold US stocks directly in your Indian demat account (linked to NSDL/CDSL). When you invest in US equities via an Indian trading app or platform, the stocks are held in a custodial account under your name with a US-based broker or partner institution. This setup is outside the Indian depository system.
To sum up
Your demat account is designed to hold a wide range of market-linked securities, but it doesn’t accommodate everything. While you can store equity shares, bonds, mutual funds, and government securities, unlisted shares and US stocks are excluded.
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