How to Transfer Money from Demat Account to Bank Account

In India’s modern securities market, demat accounts have made investing more convenient by storing financial instruments electronically. However, many investors—especially new ones—find the process of withdrawing or transferring money from these accounts to their bank account confusing.

A demat account holds your securities in electronic form, but does not hold cash funds. Any cash movement occurs through your trading account, which acts as an intermediary between your demat account and your bank account. It only holds securities such as shares, mutual funds, bonds, and ETFs. Any monetary transactions—such as adding or withdrawing funds—occur through a trading account, which is linked to the demat account and your bank account. Understanding this ecosystem is essential for investors managing their money independently.

This guide explains the end-to-end process of transferring money post-sale of securities, expected timelines, methods, involved entities, and FAQs—clearing the common doubts faced by retail investors.

In India’s securities infrastructure, three accounts work in coordination, they are as follows:

Demat Account

This is a Dematerialised Account used to hold financial instruments electronically. Shares, bonds, mutual funds, ETFs, and sovereign bonds are stored here in place of paper certificates. It is regulated by SEBI and facilitated through depositories such as:

• NSDL (National Securities Depository Limited)
  

• CDSL (Central Depository Services Limited)
  

Trading Account

This acts as a bridge between your demat account and the stock exchange. It enables buying and selling of securities on platforms like NSE or BSE. Whenever you sell a security, the cash from the sale first reaches your trading account.

Bank Account

This is your regular savings or current account where you finally receive the money. Funds can only be withdrawn to a bank account linked to the trading account.

Note: You cannot transfer funds directly from a demat account to your bank account. The chain always flows from demat → trading account → bank account.

Understanding the transaction and settlement timeline helps you know when funds become available after selling your shares.

Transaction and Settlement Process

Once you sell securities through your broker’s platform:

• The transaction is executed on the T day (Trade Day).
  

• The exchange settles the trade on T+2 days (i.e., two business days later).
  

• On T+2, the funds are credited to your trading account.
  

• Post that, you can withdraw the money to your bank account.
  

Formula (Settlement Timeline):
Sale Date = T
Trading Account Credit = T + 2 business days
Eligible for Withdrawal = After T+2 and broker fund processing

While the process is digital on most broker platforms, steps given below may vary slightly depending on the service provider. 

1. Login: Access your broker’s trading portal or mobile app.
   

2. Go to Funds Section: Click on the tab labelled “Funds,” “Accounts,” or “Wallet.”
   

3. Choose Withdraw/Transfer Option: Select “Withdraw Funds” or “Transfer to Bank Account.”
   

4. Enter Amount: Input the specific amount you wish to transfer (within available balance).
   

5. Select Bank Account: Pick the bank account linked to your trading profile.
   

6. Confirm & Authenticate: Use OTP or password to authorise the transaction.
   

7. Receive Confirmation: A confirmation SMS/email is typically sent by the broker.

Brokers support various modes for transferring money to your bank account:

NEFT/RTGS

• Works in batch mode
  

• Usually reflects within 2 to 24 hours on working days
  

IMPS

• Immediate Payment Service
  

• Useful for instant transfers, including holidays
  

UPI

• Unified Payments Interface
  

• Instant, convenient, subject to UPI limits
  

Internal Smart Transfers

• Some brokers allow same-day internal fund booking through smart booking apps or platforms

Withdrawal times vary depending on the transfer method and processing rules. Here’s what to expect:

Note: Weekends and public holidays may delay withdrawal processing by banks or brokers.

Before placing a withdrawal request, ensure the following:

• The trade is fully settled (T+2)
  

• The fund is not part of collateral amount pledged for margins
  

• No pending intraday or open trade is affecting your available balance
  

• The bank account is KYC verified and active
  

• The withdrawal request is placed within the broker’s cut-off time

While many brokers offer free fund transfers, some may charge based on:

• Priority withdrawal requests
  

• Multiple daily transfers
  

• RTGS/NEFT charges (if passed by bank)
  

Here are the charges you could usually expect:

Disclaimer: Charges related to fund transfers depend on your broker and bank and are subject to change.

Several parties work together to ensure smooth trading, settlement, and fund transfers:

Depositories

• NSDL & CDSL: Maintain electronic security records
  

Brokers

• Provide the platform for trading and withdrawal
  

• Offer tools for viewing settlement status, available balance
  

Banks

• Destination for fund credit
  

• Act as intermediary for IMPS/NEFT/RTGS
  

SEBI

• Regulates broker conduct and investor protection

Protecting your investments and personal information requires the following key security practices and understanding regulatory safeguards:

• Enable 2-factor authentication on all trading portals
  

• Avoid using public Wi-Fi to place fund transfer requests
  

• Regularly check trading ledger and contract notes
  

• SEBI mandates brokers to separate client and operational accounts, ensuring funds safety

When withdrawing funds from your trading account, you may choose between online and offline methods. Each has its own advantages and limitations as outlined below:

Online withdrawals offer faster and more convenient access, while offline methods may be necessary in certain cases but tend to be slower and less convenient.

Following these tips can help you avoid delays and ensure your fund transfers go through without issues:

• Avoid making withdrawals before trade settlement
  

• Place requests early in the day to avoid same-day cut-offs
  

• Link only verified bank accounts for transfer
  

• Regularly update contact and bank details in your trading profile
  

• Keep track of pending pledges or bonus shares, which may affect balances

Understanding how to withdraw money from your demat and trading account is essential for any retail investor managing personal finances. By tracking your trades, adhering to T+2 settlement cycles, and using secure transfer methods, you can access your funds without confusion or delay. This knowledge is particularly important for self-directed investors building a diversified financial portfolio using stock market tools.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

• SEBI – Investor Awareness
  

• NSDL FAQs
  

• CDSL – Demat Account Guide
  

• Angel One: How to Transfer Funds
  

• Share India – Demat Withdrawal Guide