How to Transfer Money from Demat Account to Bank Account?

Capital markets have always remained an attractive investment option for investors looking for higher return on their investments. Financial awareness coupled with diminished yields from traditional investment options has led to a growing interest in capital market investment in the recent years. This is evident in the growth of the mutual fund industry which allows you to invest money indirectly in the stock market and generate wealth. If you want to invest directly, you will not only need to know how to open a Demat account online but a lot more.

What is meant by a Demat account?

You must understand what is mean by Demat Account. Just as your bank account stores your money, your Demat account holds your shares, securities, bonds, mutual funds and other assets. However, these are held digitally or as electronic copies and hence are in a dematerialised form. This makes it safe, easier and convenient for you to transact once you start trading using one of the best Demat accounts in India.

You can quickly invest in capital markets online as well as hold, monitor and trade seamlessly using a Demat account which acts as a warehouse that stocks all your investments. One way to visualise this is to compare this to a godown where a businessman who sells detergent soaps stores the stock received from the manufacturer to sell it further to retail stores. You also need to open a trading account to buy and sell securities in your Demat account. Trading account acts as a bridge between the Demat and the bank account.

How does a Demat account function?

Even the best demat account in India from a brokerage comes with a trading account, bundled together. Trading account reflects cash flow-debit or credit unlike a Demat account which acts as a storage space for your securities. Whenever you want to buy or sell stocks, a request is placed for the same in your trading account which is forwarded by your Depository participant to the stock exchange.

If you have placed a request to buy, the stock exchange looks for someone willing to sell the particular quantity of shares. Clearance houses are issued orders to debit shares from the Demat account of the seller and credit it to you, the buyer. However, when you want to sell securities, either derivatives or shares, the sale proceeds get credited to the trading account linked with your Demat account within 2 days or more. The money can then be transferred to your bank account.

Transferring money from Demat account to your bank account

With a plethora of payment options available, you can easily transfer money from your Demat account to a bank account after you know how to open a Demat account online with a brokerage. The entire process is online and hence paperless. It can be done conveniently on your mobile, tablet or laptop. While the procedure is similar across brokerage houses, it can differ slightly. Here are a few steps to help you transfer money from the best Demat account in India to your bank account:

Transfer Money From Demat to Bank Account
  • Login to the trading account linked to your Demat account. Go to the ‘funds’ or ‘accounts’ section and click on it.
  • You will be presented with two options- add funds or withdraw funds.
  • To initiate transfer of money from Demat account to bank account, click ‘withdraw funds’.
  • The total amount in your trading account will be displayed. You will be asked about the amount of money you wish to transfer. Remember that you can only transfer the money received by you after the sale of securities in the Demat account.
  • Each brokerage house will indicate the fund limit as per the trading leverage provided by it. This depends on the funds added to the trading account and holding of securities in your Demat account as well. Fund limit does not equal the amount you can transfer.
  • Now enter the amount you wish to transfer and enter the bank account details in which you want the money to be transferred. To initiate the transfer, enter your trading password. Amount is credited to your bank account depending on the mode chosen for the transfer.

Conclusion

Transferring funds from your demat account to bank account or vice versa is hassle-free, quick and convenient. You can opt for IIFL’s trading and Demat account, which is one of the best Demat accounts in India that allows safe and secure transactions in capital markets. Build a solid foundation for your future and grow your earnings by opening a Demat account today

Open Demat Account at IIFL