How To Transfer Funds Into Your Trading Account?

If you have recently started trading, the first things you need to know about are how to open a trading account and how to transfer money to your trading account. Once you have figured out, you can avail various ways in which you can transfer funds to your own trading account. You go for payment gateways or NEFT/RTGS. You can otherwise choose to pay using DD or margin cheque to the broker.

What you need to do is transfer funds to the trading account. Here are your options.

1. Transfer funds to your trading account using payment gateway

Esteemed banks such as the SBI, HDFC Bank, ICICI Bank, and the Axis Bank offer payment gateway. The biggest advantage of using the method of payment gateways is that both a net banking account or debit card can be used, and the transfer is completed immediately.

The following are some of the important things you need to remember if you are to avail payment gateway for funds transfer:

  • First of all, your broker would charge a fee or Rs. 10 to Rs. 20 each time you use the payment gateway. If you plan to add money to your trading account frequently, this might be an issue as the costs will add up.
  • Secondly, SEBI rules and regulations don't allow you to use a charge card as well as a credit card to add money to your online trading account. You would be only permitted to use net banking or debit cards for this purpose.

2. Transfer funds into your trading account using RTGS / NEFT / IMPS

National Electronic Fund Transfer, commonly known as NEFT, is a common method. Here are the basic details and the advantages of this method:

  • It typically takes about 2 to 3 hours to transfer funds via NEFT.
  • There is no additional fee such as transfer charges in NEFT transfer.
  • NEFT allows you to transfer money into both your commodity account as well as the equity trading account that belongs to you.
  • NEFT also permits you to use either online fund transfer or use a NEFT cheque

If your broker has an account in the same bank as you, NEFT transfer would be instantaneous. Therefore,

  • You need to add your broker's bank account as a beneficiary.
  • The transfer has to be done using an OTP and a password, as part of a second-level authentication.

Real Time Gross Settlement or RTGS is similar to NEFT. However, RTGS allows you to transfer funds only more than Rs. 2 lakhs.

While RTGS and NEFT can be availed during official banking hours - between 9 am and 6 pm - an IMPS fund transfer can be availed at any point in time apart from specific NEFT timings and on holidays as well. the two things to remember about IMPS are:

  • IMPS is a 24X7 facility.
  • IMPS require transfer charges.

3. Transfer of funds into your trading account using cheque/DD

The third option, which is used by quite a large number of people, to transfer your money is using cheque or Demand Draft.

However, the disadvantage of this method is that it is not applicable for online trading account fund transfers.

The following are some important points that you should keep in mind while transferring funds via cheque/DD:

  • This usually takes about two to three days.
  • You must ensure that the cheque is signed properly.
  • You also need to ensure that your account has funds available.
  • If there is any case of rejection of a cheque, a penal charge by the broker gets debited.

There are certain basic document audit traits that you would be required to take care of when you are transferring funds:

  • When you use payment gateways to transfer funds, you must retain a picture of the details of your payment ID for personal records. This could be used to cross-check the credit of your online trading account.
  • When you use NEFT/IMPS/RTGS to transfer money to your trading account, a screenshot of the transfer should be retained, and a copy should also be sent via email to the broker. This ensures faster credit.
  • Copies of cheques and DDs should be maintained for records, and also be given to the broker when/if required.

You need to make sure that all the transfer details and records are being reconciled once in seven days. That way you can have secure and full control of the flow of your funds in your trading account.

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