InvestorQ : Is there any benefit in linking bank account with demat account?
Nishant Chandani made post

Is there any benefit in linking bank account with demat account?

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Anamika Sodhani answered.
2 years ago

Your trading activity is a combination of your purchases and your sale. However, trading is not just about trades but also payments and custody of shares. This is how it works. When you buy shares in the trading account, the account has to be pre-funded or you have to pay from your bank account by T+1. Then on T+2 day, the shares get credited to your demat account. When you sell shares, then the demat account gets debited on T+1 day to the extent of shares sold and the net amount (after costs) gets credited to your bank account on T+2 day. That is how the relationship works.
This is also very important for corporate actions. For example, dividends are cash payments. Based on the DP data, the registrar will pay dividends directly to the shareholder into their bank account. Or they will issue a dividend or interest warrant with the bank mandate clearly mentioned in the instrument to avoid any kind of misuse. Also when rights or bonuses are in nonallocation parts, the cash component is transferred into your bank account and directly credited. That is the benefit of linking.