Millions of Indian investors wish to make their investments in the stock market. The modern method of stock trading often comes with lots of perks and advantages of technology. With the advanced technology and the speed of the Internet, the transfer of an asset from one trader to another has become rapid and reliable.
The process of dematerialisation, introduced in 1996, changed the way of trading. You can open a Demat account with any of the depositories in India. These depositories are the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL). You can open a Demat account with any brokerage company that is registered by the Securities and Exchange Board fo India (SEBI). A Demat account is a considerable link between an investor and the money market. It is possible for investors to be directly involved in buying different forms of investment, which include mutual funds, Exchange Traded Funds (ETFs), bonds, sovereign bonds, index funds, etc.
Table of Contents
What Is a Demat Account and How Does It Work?
A Demat account is a simple remote storage where many traders invest and fulfil their financial goals. So, you can hold any type of financial securities in your Demat account. Consider a Demat account as the warehouse for your financial instruments. Online Demata ccounts provide you with ways to transfer money from a Demat account to a bank account.
Brokers such as Share India offer a robust platform to open your free Demat account.
The trading account plays the role of an interface between the Demat account and the stock exchange. So, trading through a Demat account is quite easy and robust.
How Does It Work?
As we understand the concept of a Demat account, which is basically a storage space for your holdings, another thing that bothers us is the transfer of funds to the Demat account from your bank account. Online banking is a better solution than physically visiting a place and providing the required funds to buy shares of a company. In previous times, the buying and sharing took place for a longer duration. But now, online trading works at a much faster pace. So, if you sell securities, the settlement of these securities takes around T+2 days to settle. So, once you have the money in the trading account, you can transfer it to your bank account linked to your Demat account.
Steps to Transfer Money from Your Demat Account to Your Bank Account
- First, add your bank account to your stockbroker platform. You will also need to add a fund section and verify your bank account.
- In the additional funds, you can click on the add button, and transfer funds from your linked bank account to your trading portal.
- Now, let’s consider the vice versa situation. Suppose you sell a number of securities and have a fund of XYZ amount. This amount will be visible on your trading portal.
- You can withdraw this XYZ amount and credit it directly into your bank account without any extra charges or delays.
These are the steps through which you can get money in your bank account. But you should also take note of some of the following things before making any transaction from a Demat account to a bank account.
Things to Keep in Mind While Transferring Funds
As we know, transferring funds and securities has become hassle-free and quick. But there are some things you must know to improve your understanding of Demat and trading accounts.
- The funds cannot be transferred directly from your Demat account to your bank account. The funds go through a trading account to your bank account.
- You can smoothly liquidate securities that you hold in the stock market.
- Brokerage houses allow traders to leverage their trades by lending funds to trade in the market. So, it’s better not to get confused with the fund limit and the amount you hold in your trading account.
- You can use any method of payment, including Unified Payments Interface (UPI), bank transfer, and other types as specified in your broker portal.
Before you make any trade or perform any open stock market transaction, your trading account may show a balance which may not allow transfers. The reason for this is the position you are in. If you have a pledging share or any leverage, then liquidating can be problematic.
Conclusion
With the improvement in online trading, users can transfer funds, sell their holdings, and take advantage of multiple trading opportunities. You can trade in multiple assets and start working on building a diversified financial portfolio. You can trade with your smartphone or your desktop through a smart booking application like Share India.
Learn about the collateral amount in a Demat account to manage your investments effectively.
