A Demat account ensures a simple, seamless, paperless, and genuine trading and investing. However, to maintain the genuineness of the process, you need to provide certain documents for opening a demat account.
OPEN A DEMAT ACCOUNT
HOW TO TRANSFER FUNDS?
A demat account is a place where you hold or store the shares and securities in their electronic format. Opening a demat account is necessary if you want to view, store, and manage the bought stocks.
A trading account is a bridge between the demat account and the bank account of the investor. It provides the facility of buying and selling the shares in their electronic format. Shares purchased through an investor’s trading account are credited to his demat account, and shares sold are debited.
Once an investor has opened a demat account and a trading account for online trading, the first course of action is to transfer funds into your trading account. For transferring funds online to your trading account, you will need to follow the following steps –
1.Login to your Trading Account and select the section "Accounts".
2.Go to the sub-heading "Funds".
3.Select the type of fund transfer method.
4.Enter the amount you wish to transfer.
5.Select your bank or the payment wallet of your choice.
6.Enter the trading password.
Funds can be transferred to your trading account only through the bank accounts already linked to your trading account. Now let us understand the different methods of fund transfer from your banking account to your trading account.
-This is one of the oft used methods for funds transfer. All the major banks, as well as independent providers, offer secure payment gateways.
-Payment gateways help you to transfer funds to your trading account on an immediate basis. The transferred funds are instantly reflected in the trading account.
-As per the SEBI regulations, you can use only debit cards or net banking facility for funds transfer. Credit cards or charge cards are not allowed as per rules.
-Every funding through a payment gateway incurs a nominal charge of Rs. 10 to Rs.20. However, this can add up to a lot if you use this method frequently. It is advisable to transfer enough funds in a single transaction than to do multiple transactions.
2.NEFT / RTGS / IMPS
-NEFT transactions normally take 2-3 hours for the credit to reflect in your trading account.
-RTGS is the same as NEFT, but for an amount exceeding Rs. 2 lakh. RTGS is instantaneous with no time delay.
-Both NEFT and RTGS can be done either directly through your net banking account or by depositing a cheque at the bank.
-You will have to provide the beneficiary account number (i.e., the broker’s bank account number), their IFSC code, bank and branch name.
-Both NEFT and RTGS are free of cost, i.e., the bank does not levy any charges for the transaction, and there are also no broker applied charges to the transfer. However, NEFT / RTGS has to be done within banking prescribed hours and are not available on bank holidays.
-IMPS is also an online fund transfer method that is available24*7, even on NEFT holidays. IMPS can be done only online and requires the same details as NEFT. However, IMPS attracts fund transfer charges.
3.CHEQUE / DD
-Transfer of funds through issue of cheque or DD can be done only for offline trading accounts.
-Transferring funds through cheques/DD is a tedious process. You will have to submit a duly signed cheque to the broker, who will deposit it in his account.
-The cheque clearing process takes about 2-3 days after which the funds will be credited to you.
-It is imperative to sign your cheque properly and maintain enough balance in your account. Dishonor of cheque due to any reasons will lead to heavy penal charges being debited from your trading account.
4.PAYMENT WALLETS AND UPI
-With the advent of digitization in banking, multiple payment portals like payment wallets and UPI (Unified Payment Interface – developed by Govt. of India) have ensured seamless and easy transfer of funds anywhere, anytime.
-Earlier, trading accounts did not allow the transfer of funds through these platforms; however, with the increasing popularity of these portals, brokers have started allowing their use.
-Transferring funds through these portals is easy. For payment wallets, you need to have sufficient balance in the wallet to initiate the transfer. In UPI, your bank account is linked to your UPI ID.
-You will need to provide the bank account details of the broker to transfer money from these portals. Every transfer made through these platforms is free.
5. Many major brokerage firms now provide the facility of setting up "Standing Instructions" to service your Stock SIPs or mutual fund SIPs, thus, eliminating the need to transfer money every month. Standing Instruction is the advice given to the bank to automatically debit a certain amount from your bank account on a certain date of the month and transfer it to the mentioned account. You will need to register yourself with the Fund Transfer facility of your bank, then register the broker as a payee by providing all their bank details, and every month the specified amount of fund will be transferred to your broker.
To ensure a well-documented, safe and reconciled transfer of funds, you need to keep a few things in mind –
1.When you transfer the money through payment gateways, take a screenshot of the final page that displays your payment details, payment ID, etc., and save it for reference.
2.When you transfer the funds via NEFT / RTGS / IMPS, note down the UTR number and email it to your broker for easy reconciliation of the transaction.
3.Maintain a detailed record with cheque / DD number, date, and amount if you trade offline.
4.Do not forget to tally your bank transfer statement and the trading account ledger balance regularly to eliminate any discrepancies.
The returns that you earn on your investments are credited to your Trading account. When you sell a share, the proceeds are credited to your account on T+2 working days.
If you wish to transfer the funds from your Trading account to your bank account, you should follow 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.
5.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.