To buy and hold shares in India, you generally use more than one account. People often confuse them, so it helps to see what each one is for. There are three to know: a bank account, a trading account and a demat account.
| Account | What it holds | What it is for |
|---|---|---|
| Bank account | Money | Storing your cash and moving money in and out |
| Trading account | No money or shares are 'stored' here | Placing buy and sell orders through a broker |
| Demat account | Securities, in electronic form | Holding the shares you own |
In plain words
- A bank account stores money — it is where your rupees live.
- A trading account is a doorway for placing trades — it reaches the exchange through your broker.
- A demat account is a locker for securities — it records the shares you own electronically.
Fictional example: you want to buy 50 shares of Nimbus Technologies Ltd. You keep money for the purchase in your bank account, you place the order using your trading account, and once the trade settles, the 50 shares are held for you in your demat account.
Bank, trading and demat accounts
Three different accounts, three different jobs. Click each one.
Bank account
Holds your money. When you buy shares, funds move from here (via your broker) to settle the trade.
Money vs securities
Money sits in the bank. Orders are placed from the trading account. Shares are held in the demat account.