Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against Depositories Act 1996 and NSDL and CDSL investor guides
A demat account, short for dematerialised account, is an electronic account that holds your shares and other securities in digital form, much as a bank account holds money. It is opened with a depository participant, such as a broker or bank, and the securities are recorded with one of the two depositories in India, NSDL or CDSL. You need a demat account to apply for an IPO, because allotted shares are credited there. To open one you need your PAN, Aadhaar-based or other KYC documents, a bank account and a mobile number linked for verification, and the process is usually completed online. Each account has a Depository Participant ID and a client ID, which together identify it in IPO applications. Most investors also have a trading account linked to the demat account so they can buy and sell shares on the exchange. Demat accounts have charges such as annual maintenance and transaction fees, which vary between brokers. For safety, nominate a beneficiary, never share your login or OTP, and check your holdings statements regularly. Securities held in demat form cannot be lost, forged or damaged, unlike paper certificates.
Example: You apply for an IPO using your demat account number, with a DP ID and client ID. After allotment, the registrar sends the details to the depository, and 10 shares appear in your holdings in your broker’s app.
A demat account, short for dematerialised account, is an electronic account that holds your shares and other securities in digital form, much as a bank account holds money. It is opened with a depository participant, such as a broker or bank, and the securities are recorded with one of the two depositories in India, NSDL or CDSL. You need a demat account to apply for an IPO, because allotted shares are credited there. To open one you need your PAN, Aadhaar-based or other KYC documents, a bank account and a mobile number linked for verification, and the process is usually completed online. Each account has a Depository Participant ID and a client ID, which together identify it in IPO applications. Most investors also have a trading account linked to the demat account so they can buy and sell shares on the exchange. Demat accounts have charges such as annual maintenance and transaction fees, which vary between brokers. For safety, nominate a beneficiary, never share your login or OTP, and check your holdings statements regularly. Securities held in demat form cannot be lost, forged or damaged, unlike paper certificates.
Allotment is the step after an IPO closes in which the company decides who receives shares and how many. Once bidding ends, the registrar prepares the basis of allotment, which explains how the shares were shared between categories and applicants. If an issue is not oversubscribed in a category, most valid applicants get what they asked for. If it is oversubscribed, shares are rationed. In the retail category, successful applicants are chosen by a computerised lottery and each winner usually receives one lot, because the demand is far larger than the supply. Larger categories receive shares in proportion to their bids. After allotment, shares are credited to the demat accounts of successful applicants, and money for unsuccessful applications is released from the ASBA block. SEBI requires the whole process, from issue close to listing, to be completed within three working days. You can check your allotment status on the registrar's website using your application number, PAN or demat details, and on the exchange page for the issue.
Worked example
You apply for an IPO using your demat account number, with a DP ID and client ID. After allotment, the registrar sends the details to the depository, and 10 shares appear in your holdings in your broker's app.
