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Why Every Indian Must Have a Demat Account Along with a Bank Account

05 Jan 2023

Some individuals wonder about the necessity of holding a Demat account along with a bank account. There are still more individuals who ask themselves, “Can I have 2 Demat accounts linked to the same bank account?” Firstly, you should know that having a Demat account linked to your bank account is important. Today, most individuals search for fruitful investment opportunities, and it is common to find everyone you know dabbling in stocks, shares and other asset trading. With the pandemic having a huge impact on employment status and many people out of work, opportunities to earn quick profit are there for the taking if you invest in stocks. Moreover, if you want to broaden the scope of your financial portfolio, investing in the markets is a good plan. Therefore, having a Demat account is necessary and can only aid you. 

  • Accounts for a Single Purpose

You may not be in the mood to invest currently, but you may possess shares and stocks in physical form. These should be dematerialised and turned into electronic form. This is a mandatory requirement and for this purpose, a Demat account is essential. It is an account that stores your assets in an electronic format. Once you have stocks or any other securities in your possession in a Demat account, you may wish to sell those for a profit. Hence, you need a trading account. How to link Demat account to trading account is an easy process, and you can connect your Demat account to a trading account with the same depository participant or a different one. A depository participant is usually a bank (could be the bank where you already have a savings account or any other instruments), or a brokerage firm. 

  • Accounts Explained

The most experienced investor will tell you that you should have a Demat account to store your securities, a trading account to buy or sell securities (make transactions with assets) and a bank account linked to these accounts. If you open a Demat account in your current bank, how to link Demat account to bank account is not a problem. This is automatically done by your bank on your instructions. However, why do you have to link your bank account to your Demat and trading account? Your trading account is used to conduct trades, that is, to buy or sell securities. If you buy securities, the money used to buy these is directly debited from your bank account, and if you sell securities stored in your Demat account, your profits/gains are directly deposited in your bank account. Once your demat account opening process is done by your bank or brokerage firm, how to link demat account with trading account and other connections are done seamlessly online or offline. 

  • Open a Demat Account

In the digital age of ‘now’, it is vital to have more than conventional ways to invest, and investing in the markets can reap good returns, both for the long haul and short term. With Motilal Oswal, you get an investment platform with a myriad of benefits. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | Upcoming IPO | LIC IPO


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