InvestorQ : Are demat account and bank account similar?
Riya Dwivedi made post

Are demat account and bank account similar?

Answer
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Tisha Malhotra answered.
2 years ago


The bank account is where you hold your cash. If you got a gift of Rs.10,000 what will you do? You can put the money in your bank account. The bank will then update your passbook and that will be proof that the money is in your bank account. You can do a lot of things with your bank account. You can withdraw money from the bank account. You can also issue cheques for payments like school fees, college fees, electricity bill, telephone bill etc. You can only issue cheques against the balance in your bank account. It is a very simple process. But you cannot deposit cash in your demat account.
You can hold shares in the demat account. A share is ownership of a company. So now that you have Rs.10,000 how about buying shares? Say, SBI is available at Rs.250 in the market. That means you can buy 40 shares of SBI with the money. Ok, not exactly. You will only be able to buy less than 40 shares of SBI because you also need to pay brokerage charges and statutory charges. Let us say, you buy 38 shares of SBI. This SBI shares once you have made the payment, will be in your demat account. In a way, you are right. The demat account is a bank account for shares. Like you hold cash in your bank account, you hold shares in your demat account