Last Updated: Mar 21, 2024 Value Broking 5 Mins 2.7K

For buying and selling shares in the stock market, it is essential to have both a Demat account and a bank account. Therefore, knowing their respective definitions and various types is necessary to understand the Demat account vs. a bank account. 

Bank Account

A bank account is an interest-based deposit provided by a bank or other financial institution. They pay nominal annual interest rates. 

It is a safe and reliable way of saving and utilizing your money without papers.

Demat Account

A Demat account allows investors to hold financial securities digitally in their Demat account. In short, the Demat account makes the procedure of holding, trading, and monitoring financial securities safe and fast.

Different Types of Bank Accounts

A bank account comes in various options with different functions that you can use for other purposes. Some of the common bank accounts are as follows:

Saving Account

The majority generally use this account to save their earnings and use it for personal transactions. Saving accounts have less annual interest, and transactions or withdrawing cash charges are different from bank to bank. To open a savings account, you need to have a PAN card, Aadhaar card, and address proof, i.e., light bill.

Current Account

It is necessary to have a business account to have a hassle-free transaction for your business. A current account is majorly for business transactions. These accounts have different charges and services as per a business activity.

Salary Account

Corporations and companies use these accounts to pay their employees through banks. In addition, each employee gets their salary account. 

Non-Resident External Account (NRE)

These accounts are primarily for the people who live and work outside India.  The money deposited in these accounts is Indian Rupees deposition, but it gets deposited from where the person lives outside India.

Recurring Deposit

These accounts are opened as deposit accounts by a person who wishes to save a regular income with a fixed tenure and interest rate. You can open this account link through your savings account.

Fixed Deposit

These accounts are mainly to earn interest on deposits for a fixed period. You can utilize your idle money with Fixed Deposit and its interest. It links with your savings account.

Types of Demat Account

There is a regular type of Demat account that most Indian citizens use for their trading purpose.

Repatriable Demat Account

In this type of Demat account, NRIs can fund transfers abroad. However, it is required to associate with an NRE bank account.

Non-Repatriable Demat Account

This account is also for NRI. Your funds cannot get transferred abroad in this type of Demat account. And it requires an associate with an NRO bank account.

Many banks offer a 3 in 1 account that offers a savings account, a Demat, and a Trading account. The bank account is essential to use a Demat account and add funds for your Day trading. In addition, You can open a Demat account with leading technology and expert advice service with a professional financial firm.

Both Demat and bank accounts come in different types and various functions. You must research and look for a suitable Demat and bank account as per your requirement. Each account has multiple charges, and you must consider opting for any of these accounts.

Both Demat and bank accounts have different types and forms mentioned above to understand the essential criteria and usage of those accounts.

Demat Account vs. Bank Account: How Does the Entire Process Work?

Demat and bank accounts function similarly, but the significant difference is cash holdings and financial securities. You can open a Demat account with a bank, financial firm, or online broker service. In addition, there are the latest offers available for users to open a Demat account.

Bank accounts are an essential source for loans and transactions. You can also make investments through different bank schemes. In the difference between a Demat account and a bank account, you can check the functionality of each account.

Banks in India can be opened by private banks, government banks, or foreign and national banks. Citizens of India, as well as NRIs, can open bank accounts in India. In addition, several new online platforms provide a way to save your money and use it for various transactions. 

Whether a bank service or a Demat account, both services have revolutionized and made progress along with the internet revolution. The online transfer of money and shares is so quick and errorless that it makes the trading and banking service most desirable and necessary for every individual. In addition, many big companies offer a wallet and saving account feature for making their customer’s transactions seamless.

The stockbroker app has a wallet-like feature that saves the amount you added to your stockbroker app. As a result, you can easily make your transaction through your stockbroker app without adding a pin or transferring money from your bank account.

There is a difference between a Demat account and a bank account, but both accounts help you essentially in stock trading. I hope you found this helpful article to understand the Demat account vs. bank account in detail.

Frequently Asked Questions (FAQs)

To open a Demat account first, you need to choose a stockbroker firm. There are plenty of stockbrokers who can provide you with an online Demat account. Then, all you need to do is register and submit the required documents and do Online KYC for opening your Demat account.

A Demat account is a storage facility for your money market assets. For example, you can store equity, F&O, Mutual funds, Commodities, etc. You can also overview your asset and plan accordingly. There are many advantages to help you grow and make your investment value over time.

Depending upon your need both have their own benefits and requirements. However, you need to have a bank account in order to add funds in your stock broker platform.

Yes, you need to link your Demat account to transfer your fund to buy or sell shares. The Demat account is the best way to invest and grow in the financial market in India.

A Demat account stores your securities, and a bank account holds your money in electronic form, respectively. Therefore, you need to link both accounts to make your trade and investments easy and convenient.