Transferring money from a Demat account to your bank account is an essential function for any investor who actively trades in stocks, bonds, or mutual funds. The Demat account serves as a secure place to hold securities in an electronic format, but cash proceeds from sales of securities need to be transferred to a linked bank account for access.
In this article, we will guide you through the process of how to withdraw money from Demat account to your bank account, and provide answers to some frequently asked questions.
How To Withdraw Money From Demat Account
Before delving into the process, it is essential to understand that the Demat account itself does not directly hold cash. It stores securities such as stocks, bonds, and mutual funds. However, when you sell securities from your Demat account, the money from the sale is credited to your linked trading account or a settlement account, which is directly connected to your bank account.
Here is a step-by-step guide on how to transfer money from Demat account to bank account:
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Step 1: Ensure Your Demat Account Is Linked to Your Bank Account
The first and most crucial step is to ensure that your Demat account is linked to your bank account. When you open a Demat account with a Depository Participant (DP), you will need to provide your bank account details for smooth transaction settlement.
- If your Demat account is not already linked to a bank account, you will need to update it with the relevant details. Most brokers offer an option to update your bank details online through their trading platform or customer service.
Step 2: Selling Securities
Once your Demat and bank accounts are linked, the next step is to sell your securities. When you decide to sell stocks, bonds, or mutual funds held in your Demat account, the proceeds from the sale will be credited to your trading account. From there, the money is transferred to your linked bank account.
- Log in to your online trading platform provided by your broker.
- Select the security (stocks, bonds, mutual funds) you want to sell.
- Enter the number of units you wish to sell and the price at which you want to sell.
- Once the sale is executed, the money will be credited to your trading account after the trade is settled.
Step 3: Settlement Process
In India, the settlement cycle for securities transactions is typically two days (T+2). This means that if you sell your securities on a Monday, the trade will settle on Wednesday, and the money will be available in your trading account by Thursday.
Once the settlement is done, the amount from the sale will be available in your trading account.
Step 4: Transfer Money From Demat Account
After the settlement, you can transfer the money from your trading account to your linked bank account.
Here’s how to transfer money from demat account to bank account:
Step 1: Log in to your trading platform or contact your broker.
Step 2: Navigate to the ‘Fund Transfer’ section of the platform.
Step 3: Choose the amount you want to transfer to your bank account.
Step 4: Select the bank account that is linked to your Demat account.
Step 5: Confirm the transfer request, and the amount will be transferred to your linked bank account.
Most brokers will process the transfer instantly or within 24 hours, depending on the broker’s systems.
Step 5: Check Your Bank Account
Once the transfer has been initiated, check your bank account for the credited amount. The time it takes for the funds to appear in your bank account can vary, but typically it should not take more than a day or two.
Important Points to Consider
- Bank Working Hours: If the transfer is made during non-banking hours, such as weekends or holidays, the transfer might take an extra day.
- Transfer Limits: Some brokers may impose limits on the amount you can transfer in a single transaction. Always verify with your broker before initiating large transfers.
- Bank Charges: While brokers typically do not charge fees for transferring money to a linked bank account, some banks may charge a small fee for processing the transfer.
Conclusion
Knowing how to withdraw money from demat account to your bank account is a straightforward process, but it does require the sale of securities and proper linking between your accounts. Always ensure that your Demat account and bank account are correctly linked to make the process seamless. By following the steps outlined in this article, you can easily transfer your earnings from investments to your bank account for further use.
Frequently Asked Questions – FAQs
1. Can I transfer money from Demat account without selling securities?
No, you cannot transfer money from a Demat account without selling securities. Your Demat account only holds securities, and funds are credited when you sell them through your trading account.
2. How long does it take for money to be transferred from the Demat account to the bank account?
Typically, it takes 1-2 days for the money to be transferred from your Demat account to your linked bank account, depending on the broker’s system and the settlement process.
3. Do I need a trading account to transfer money from my Demat account to my bank account?
Yes, a trading account is required to buy or sell securities. When you sell securities from your Demat account, the proceeds go to your trading account, which is then transferred to your linked bank account.
4. What should I do if the money has not been transferred to my bank account after the trade settlement?
If the money has not been transferred, contact your broker or customer service for assistance. They can help track the transfer status and resolve any issues.
5. Can I transfer money from my Demat account to any bank account?
No, you can only transfer money to the bank account that is linked to your Demat account. This ensures a secure transfer process and prevents unauthorized transactions.
Author: All Content is verified by SMC Global Securities.
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- 20 Lac+ unique clients
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