Can a person have multiple Demat accounts in India?

With the returns from some investment products tapering in the last few years, equity has become a popular option with investors. The addition of new Demat accounts has been increasing gradually over the years. You can have numerous Demat accounts in India. Thus the question among many investors is “can I have multiple Demat accounts?” The markets regulator Securities and Exchange Board of India or any other authorities have not put any limitations on multiple Demat account opening. This blog answers other questions including “can I open multiple Demat accounts in India” and “can a person have multiple Demat accounts”.

Not with the same broker

While you can have more than one Demat account, certain conditions have to be followed. The primary condition is that one cannot have more than one Demat account with the same DP.

Charges

Certain fees have to be given like account opening charges and yearly maintenance charges (AMC) so that your account is still in work. Various charges will continue to be levied by the DP even if you do not utilize the Demat account for a long time.

Unused account

If the Demat account remains unused for a long time, it may be frozen by the DP. To reactivate the Demat account, the e-KYC will have to be completed again.

Monitoring

Just opening multiple Demat accounts is not enough, it is important to keep a track of the transactions carried out through numerous Demat accounts.

The rationale behind having more than one Demat account

There are no legal conditions that bar the opening of more than one Demat account. However, there should be a rationale behind having more than one Demat account.

Categorization of portfolio

Many people trade and invest as per the market conditions. A part of the portfolio is invested for the long term while the balance is used for trading. Having multiple Demat accounts can help you segregate your portfolio efficiently.

Access to different services

When you have multiple Demat accounts, you also get access to research and analysis from different Stockbrokers. The information can be used to increase the efficiency of investing and trading activities.

Safety

It is relatively safer to keep the shares purchased by you with the stockbrokers if you have more than one Demat account. Without your permission, it is not possible to move the shares from the Demat account.

Things to know about opening multiple Demat accounts

If you wondering, “can I open multiple Demat accounts?” or “can a person have multiple Demat accounts?”, the answer is yes. You can do so but there are certain guidelines around the same.

• You cannot open more than one Demat account with the same Depository Participant or DP or with the same broker.
• Each account you hold will attract separate charges for annual maintenance.
• Not using the Demat account will attract charges and might be frozen. Reactivating such accounts attract penalty charges. Keep an eye on all transactions across your Demat accounts.
• While the answer to ”can we open multiple Demat accounts” is yes, remember there is no limit or bar on the number of accounts against one PAN.

Now that you have a clear answer for “can I open multiple Demat accounts?” or “can we open multiple Demat accounts?”, let’s move on to the requirements of holding multiple Demat accounts.

Requirement for multiple Demat accounts

There is no compulsory requirement to open multiple Demat accounts. You may simply have one Demat account and link it to multiple trading accounts. While the answer to “can I open multiple Demat accounts?” or “can we open multiple Demat accounts?” is yes, you need not go ahead and open many such accounts.

Advantages of multiple Demat accounts

There is so much curiosity among new account holders on questions like “can we open multiple Demat accounts”, you need to know the advantages of multiple accounts. However, there are disadvantages too.

1. Multiple Demat accounts make it easier for you to organize various shareholdings. Your investments are sorted in separate accounts for ease of management.

2. Multiple Demat accounts with separate brokerages, allow users to access varied interfaces and add-on services from both brokers.

3. On the other hand, annual charges for maintaining many accounts are high. Toggling multiple Demat accounts could be time-consuming. Too many accounts might lead to higher account dormancy.

Based on your investment goals, you can choose between managing a single Demat account or multiple Demat accounts.

Disadvantages of Multiple Demat Accounts

Although having multiple Demat accounts can be beneficial, they come with some disadvantages for the investor.

• Opening multiple Demat accounts will require the investor to pay multiple Demat account-related charges, such as annual maintenance charges, increasing the overall trading expenses.
• Monitoring and managing multiple Demat accounts can be time-consuming and complex as different brokers have varying features and requirements. Multiple Demat accounts also come with numerous documents, making it challenging to keep them safe and updated.
• With multiple Demat accounts, the owner must keep using the account for trading and investing purposes, as the broker can freeze a dormant Demat account. In such a case, recovering and transferring the investments to a different Demat account becomes a hassle.

Conclusion

There are often many questions about holding multiple Demat accounts like “can we have multiple Demat accounts”, “can I open multiple Demat accounts”, “can we open multiple Demat accounts”, “can a person have multiple Demat accounts” or “can I open multiple Demat accounts in India?”

However, you should stick to a lower number of accounts. Keeping track of multiple Demat accounts becomes difficult if you are a prolific trader or investor. Opt for an IIFL Demat and Trading account and get access to quality research that will reduce the need to have multiple accounts.