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How to Transfer Funds to your Trading Account?

  • Rudri Rawell
  • Mar 12 2022
  • 6 minutes
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An investor/trader has to bear in mind various aspects while trading in the stock market. One of the first steps towards actually making an investment in the stock markets is to transfer funds to the trading account. There are various funding options available for transferring money into a trading account. However, choosing the right one can make a lot of difference when it comes to successful trading

There are various fund transfer methods and fees associated with each, so one must know how to identify the right method as per trading needs before initiating fund transfer into a trading account.

Here, we will explain various fund transfer options that can be used to transfer funds to a trading account.

Fund transfer into trading account – via payment gateway

One of the common fund transfer methods that is being commonly offered by most brokers to transfer funds in trading accounts is by using payment gateways. Most major banks, such as Axis Bank, ICICI Bank, HDFC Bank, SBI, etc, offer payment gateways. 

Benefits of using payment gateway:

  1. Users can use any debit card or internet banking for transfer of funds into a trading account. 
  2. The fund transfer is done immediately. 
  3. The trading account reflects the credit amount and allows users to start trading immediately. 

Factors to keep in mind:

  1. Every time a user uses the payment gateway, the broker debits a fee that can range between Rs. 10 and Rs. 20. Those who frequently need to add funds to their trading account may find this option expensive. 
  2. As per SEBI regulations, the transfer of funds into a trading account via credit or charge card is not allowed. Therefore, one can only make use of debit cards or net banking in this option. 

Fund transfer into trading account – via NEFT / RTGS / IMPS

Another and more popular alternative for transferring funds to a trading account is by using National Electronic Fund Transfer (NEFT). Normally, this process takes anywhere between 2-3 hours for some of the top banks, like HDFC and SBI. However, if the NEFT is carried out from the same bank where the investor’s broker has an account, then the transfer is done instantaneously. 

Using NEFT for transfer to trading account

To use NEFT:

  1. A user must add the broker’s bank account as a beneficiary
  2. Users can then transfer funds via password and OTP for additional authentication. 
  3. No fund transfer charges are applicable. 
  4. It can be done online or via an NEFT cheque at the bank branch since both use the same amount of time. 

Using RTGS for transfer to trading account

Real-time gross settlement (RTGS) is similar to NEFT. The primary difference between the two is that RTGS is used for fund transfers that are above Rs. 2 lakhs. 

Using IMPS for transfer to trading account 

NEFT and RTGS can be used for fund transfer to trading accounts only during normal banking hours, which is generally between 9.00 am to 6.00 pm. Any NEFT transactions done after these timings will be effected only on the next banking day. This is when IMPS comes into the picture. 

IMPS fund transfer is instantaneous and outside of the banking hours or holidays. IMPS differs from NEFT services due to the amount of time taken for transfer and the availability of service. It is important to note that IMPS has fund transfer charges which can end up adding to one’s overall trading cost.

Fund transfer using UPI

The prevalence of UPI has meant that funds can be easily transferred to your trading account using any of the UPI apps like Google Pay, PayTm, Axis Mobile, Amazon, etc . The amount will be instantly debited from your linked bank account and credited into your trading account. 

Fund transfer into trading account – via cheque / DD

Investors and traders can transfer funds into their trading accounts by issuing a cheque in favor of the broker. This option can only be used in case one has an offline trading account. For online trading accounts, it is easier to transfer funds through a payment gateway or using NEFT/RTGS. 

Factors to keep in mind:

While transferring funds via cheque/ DD to a trading account:

  1. The broker gives credit for the cheque / DD amount once the clearing credit is received after 2-3 days. 
  2. Users must ensure that the cheque is signed appropriately and their account is well funded. 
  3. Cheque rejections attract penal charges and the amount gets debited by the broker from the trading account.

Conclusion

Many different modes can be used for transfer of funds into a trading account. Each of the above-mentioned modes comes with certain advantages and disadvantages. Therefore, an investor or trading must make the right choice as per personal convenience while investing or trading. It is important to make sure that all the transfer details are recorded and checked frequently so that one can have full control of personal funds that go into the trading account.

FAQs

What is a Demat account?

A Demat or Dematerialised account offers investors and traders the facility of retaining stocks and securities in electronic format. In online trading, securities that are bought can be held in a Demat account. This facilitates ease of trading.

Are Demat and trading accounts essential for investing in stock markets?

For investors and traders who deal in the stock markets, it is mandatory to have a trading account. A Demat account is essential for those who want to buy and hold securities in digital form.

How can I open a trading and Demat account?

To open a trading and Demat account easily, you can download the Finity app on your smartphone. The app offers a seamless KYC process that can be completed online before requesting for an account opening.

Can I have a Demat account without a trading account?

To trade or invest in the stock markets, it is essential to have a trading account. However, a Demat account is required if one wants to buy and hold securities in digital form. Therefore, one can have a trading account without having a Demat account, but not vice versa.

Who can apply for a trading account?

Anyone who wants to trade in the stock markets can apply for a trading account, unless he/she is specifically barred from trading in the markets by SEBI.

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