Many investors do wonder as to why the demat account is insisting for bank account details. After all, the bank account pertains to funds and the demat account pertains to shares. This is for your own safety only. When your demat account is mapped to a trading account and bank account, then the entire process becomes very smooth and seamless. When buying shares, you are required to transfer in from the same bank account. Similarly, when you sell the shares the transfer of the proceeds will also be made into the same bank account only.

Secondly, when you are paid by physical cheques, the cheque will be drawn in your name with the specific bank mandate clearly mentioned in the cheque itself. For example (Ramesh Shastri, HDFC Bank, Account Number – XXX, Branch, Andheri). This makes the entire process safe so that nobody else can misuse these sale proceeds. This also applies to dividend payouts via physical mode. When the payout is made it is paid out with the bank mandate mentioned so that even if the dividend warrant is lost in transit, you don’t have any risk of falling into the wrong hands.