It isn’t enough to finish the demat account opening procedure. Once your demat account is ready, you also need to transfer funds to it so that you can properly commence your trading and investing journey. Fortunately, this, like opening your demat account, can be done online too! To know how to transfer funds online, all you need to do is follow the steps given below:
1. Log in to your demat and trading account.
2. Select the section titled Accounts.
3. Select the sub-heading of Funds.
4. Choose the type of transfer method.
5. Enter the amount of funds to be transferred.
6. Select the bank or payment wallet of your choice.
7. Enter your trading password to authenticate the transfer.
Note that funds can only be transferred from the bank account already mapped to your demat and trading account. Let’s now explore the methods as to how to transfer funds to demat account.
1. Payment Gateway: This is the most frequently used method to transfer funds online, since all major banks provide highly secure and reliable payment gateways for transactions. Using a payment gateway also ensures that funds are transferred from your bank account to your demat account instantly, possibly on the same day itself. In line with SEBI’s guidelines, you can transfer funds by using your debit card or Netbanking facility through a payment gateway, like Bill Desk or Razorpay. Credit cards or charge cards are not allowed for fund transfers. One disadvantage of this process is that there is a small charge of Rs. 10 or Rs. 20 that is generally incurred when using a payment gateway. Therefore, it would be wiser to transfer a larger amount of funds in one go.
2. NEFT and RTGS: NEFT (National Electronic Funds Transfer) and RTGS (Real-Time Gross Settlement) had been the default methods for transferring money since they were first introduced. While not as instantaneous as a payment gateway, NEFT and RTGs transfers are reflected in 2-3 hours and do not incur any charges. If the amount is more than Rs 2 lakhs it can be reflected on the same day. However, unlike payment gateways, they can only be processed during specific banking hours and not on holidays. IMPS is a form of fund transfer that requires you to enter details such as IFSC Code and Branch Name. It is available 24x7, but it does incur transaction charges as well.
3. Wallets and UPI: With advancement of technology in the post-demonetization decade, e-wallets and UPI apps have become a household name among individuals, making payments and transfers even on the go. In the case of wallets, they need to be pre-loaded with funds but in the case of UPI apps, they are linked to your bank account and are even easier to manage. Fund transfers initiated through any of these channels are free, without any charges or expenses.
4. Cheque and Demand Draft: For traders and investors, who find technology daunting, there is the option of making fund transfers using the traditional means of cheques and demand drafts. This is, however, done mostly for offline accounts and it takes about two or three days for funds to be transferred through a cheque or a demand draft to be reflected in the account. This method can be tedious, in comparison to faster and smarter methods, but some investors and traders prefer it nevertheless.
5. As an alternative to all the above methods, a trader or an investor can also set up a Standing Instruction to debit or transfer funds online automatically as per one’s convenience and preference.
Before you initiate a fund transfer between your bank account and trading and demat account, you need to bear in mind a few crucial things.
1. If you are using a payment gateway, make sure to take a screenshot of the final page that displays the payment details, like the amount and the payment ID, to keep it as a reference in case of any problem or misunderstanding.
2. If you are using NEFT, RTGS or IMPS, make sure that you note down the UTR number of the transaction and send it across to your broker for proper reconciliation.
3. Make it a point to keep a record of all the cheques and demand drafts that have been issued for fund transfers.
4. Lastly, always compare your bank transfer statement and trading account ledger to rule out all discrepancies.
Just as you transfer funds from your bank to your trading and demat account, you can also do the reverse by following the below steps:
1. Login to your trading account.
2. Under the Accounts section, you will find the facility to transfer funds to your bank account.
3. Most brokers now provide the facility for account holders to manually transfer the funds to the linked bank account. Here, the credit is processed immediately.
4. If the facility is not available, you can raise a request with the Back-office of your broker online or over call, and they will transfer the funds from your trading account to your bank account. This process takes 1-2 days for your funds to reflect in your bank account.
Although trading accounts don’t have minimum balance requirements, it is essential to maintain balance to service any charges that may be applied to you. In case of debit balance, you will be charged "Delay-in-pay-in" charges at 18%p.a.
Fund transfers are a crucial step of your investment or trading journey in the markets and therefore, it’s essential that they proceed smoothly and securely without any mishaps or hassles.
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