How to Transfer Money from a Demat Account to a Bank Account?

The purpose of investing in the securities market is to earn a higher return on investment (ROI) and have other sources of income. Investors can encash the proceeds of sales from their respective Demat accounts. This blog provides a guide on how to transfer money from Demat account to bank account.

What is a Demat Account?

The dematerialisation or Demat account acts as a platform that holds the securities that you have purchased from the securities market electronically. It ensures you can trade securely, avoiding any hiccups. Opening a Demat account also allows investors to use a trading account to buy and sell securities.

How Does a Demat Account Work?

The Demat account works simply. The proceeds from the sale of securities are deposited into your trading account, which is transferred to your bank. For each of your purchase orders, the stock exchange searches for vendors whose Demat accounts will be utilised to debit the desired shares and credit them to your account. These exchanges take two days (T+2) to settle the transactions, and they will take some time to appear in your trading account.

How to Transfer Money from a Demat Account to a Bank?

Almost all online brokers allow operations through a variety of platforms, like mobile applications and websites. Across these platforms, you can find fund transfer activities in either the ‘Accounts’ or ‘Funds’ sections.

Although the process to transfer funds from the Demat account to your bank account varies from broker to broker, there is a common procedure that you can find in every brokerage application. Follow the steps below to transfer money from your Demat account to your bank account:

Step 1: Sign in to your Demat or trading account by opening the online application of your chosen broker.

Step 2: Go to the ‘Profile’ section and click on ‘Funds’. You will see two options, asking you to add funds or withdraw funds.

Step 3: For transferring the returns to your bank account, click on the ‘Withdraw Funds’ option. Your chosen online brokerage platform will show you the amount you have earned. It will ask you how much you want to withdraw.

Step 4: You can only transfer the amount to your bank account that you have in your Demat account after selling the securities. For instance, if you have INR 5,000 in your account, you can withdraw INR 5,000 or less than that.

Step 5: If you have multiple bank accounts linked to your Demat account, select the account in which you want to transfer the funds.

Step 6: You will receive the funds in your bank account in two business days.

Important Things to Consider While Transferring Funds

Since you have understood the process of transferring funds to your bank from your Demat account, you need to keep in mind the following factors:

• The funds in your Demat account cannot be transferred directly to your bank account. It is transferred to your bank account through a trading account.
• You can only withdraw the returns that you got from the sale of securities.
• Brokers allow traders to leverage by lending funds to them to complete their trade. Do not get confused with the amount you have in your trading account and the fund limit.
• You can use the payment method of your choice. You can use either bank transfer, Unified Payments Interface (UPI), or any other payment type supported by your online broker.

Final Thoughts

The above procedure makes you understand how to transfer money from Demat account to bank account. The funds will be transferred to your bank through your trading account.

Want to open a Demat account for free? Download the PL Capital Group – Prabhudas Lilladher application and open a Demat account in a few minutes. You can also add a bank account to withdraw funds that you received as proceeds of sale. PL offers you a variety of investment services like portfolio management services, wealth management services, and alternative investment fund services in a single platform.

Frequently Asked Questions

1. Can I transfer money from the Demat account to the bank?

   Yes, you can transfer money from your Demat account to your bank account. After navigating to the funds section of your online brokerage app, click on the add funds option. Then, put the desired amount you want to withdraw.

2. When can we transfer money from a Demat account to a bank account?

   You can transfer money from your Demat account to your bank in two business days.

3. How can we withdraw money from the NSDL Demat account?

   You cannot withdraw any funds from an NSDL Demat account since a Demat account does not hold any money but only securities.