1.20What is the bank account’s role in investing?
1What is it?
Your bank account is where money comes from when you buy and goes back to when you sell. It is linked to your trading account.
2Why does it exist?
For safety, SEBI rules say money can only move between your trading account and bank accounts in your own name that you have linked. This stops fraud and money laundering.
3Stock market example
Flow: you add ₹10,000 from your bank to your trading account (via UPI or net banking), buy shares, and later sell them for ₹11,000. You withdraw the ₹11,000 back to your bank. Dividends are paid straight into the bank account linked to your demat.
4Diagram
- 1Bank → add funds (UPI/net banking)
- 2Trading account balance
- 3Buy shares
- 4Sell shares
- 5Withdraw money to bank
5Risks
- Never transfer money to an individual’s personal account for "stock tips" or "guaranteed returns". This is a common fraud.
6Quick revision
- The bank is the source and destination of money.
- Only your own linked bank accounts can be used.
- Dividends go to your linked bank account.
7Knowledge check
Q1. Where do dividends get credited?Show answer
To the bank account linked to your demat account.
Q2. Can you add funds from a friend’s bank account?Show answer
No. Only your own linked accounts can be used.
Q3. Name the three accounts needed to invest.Show answer
Bank, trading and demat accounts.
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