How many Demat Accounts one can have?
5paisa Research Team
Last Updated: 30 Aug, 2024 01:00 PM IST
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Content
- Can I Open Two Demat Accounts in India?
- Things to know about opening multiple Demat accounts
- Requirement for multiple Demat accounts
- What are the advantages of having multiple demat accounts?
- What are the disadvantages of opening multiple demat accounts?
- Managing multiple Demat accounts
- The EndNote
To invest in the stock market, you must first open a demat account. To take delivery of equities in either the primary or secondary markets, you need a demat account. This complies with the rules established by SEBI, the Securities and Exchange Board of India. Your demat accounts can be used to house a variety of financial assets, such as bonds, mutual funds, and more.
Investors are permitted by SEBI to have multiple demat accounts in their names. Therefore, having numerous demat accounts is not prohibited.
Can I Open Two Demat Accounts in India?
The one-word answer to the question, ‘Can I have multiple demat accounts?’ or ‘Can I open two demat accounts?’ is a resounding YES.
Just like you can open multiple bank accounts with several banks, you can open multiple demat accounts with as many Depository Participants (DPs) or brokers as you want. However, you must link your PAN (Permanent Account Number) with all demat accounts. Also, an investor can only open one account with a DP or broker, meaning you cannot open more than one Demat account with a broker. However, there are no limitations on the maximum Demat accounts an investor can open.
Hence, the straightforward answer to the question, ‘Can I open two demat accounts?’ or ‘Can I have multiple demat accounts?’ is ‘Yes.’
Things to know about opening multiple Demat accounts
Is it possible for me to open more than one Demat account? answer to "can a person have multiple Demat accounts?" is in affirmative. Although there are some restrictions, you are free to do so.
-You are not permitted to open several Demat accounts with same broker, Depository Participant, or DP.
-You will be charged separately for annual maintenance for each account you own.
-If Demat account is not used, fees will apply and it may even be frozen. There are penalties associated with reactivating such accounts. Watch every transaction that occurs in each of your Demat accounts.
-Although answer to question "can we open multiple Demat accounts?" is yes, keep in mind that you can open as many accounts as you like using a single PAN.
After receiving a clear response to your questions about "Can I open multiple Demat accounts?" or "Can we open multiple Demat accounts?", let's discuss prerequisites for maintaining multiple Demat accounts.
Requirement for multiple Demat accounts
The opening of several Demat accounts is not required. You could just link several trading accounts to a single Demat account. You don't have to open a lot of these accounts, even though answer to questions "can I open multiple Demat accounts?" and "can we open multiple Demat accounts?" is yes.
What are the advantages of having multiple demat accounts?
The answer to the question, ‘Can I have multiple Demat accounts?’ is ‘Yes, you must’ for the following reasons:
Better Portfolio Segregation
People investing in the capital market invest in different types of instruments like equity shares, IPOs, currency, commodities, ETFs, mutual funds, etc. However, if you have one demat account, you may face difficulty tracking the performance of each instrument. Moreover, a single demat account may make it difficult to segregate long-term and short-term investments. Hence, having multiple demat accounts is beneficial because you can assign one demat account for one purpose. For example, if you are an equity trader/ investor, you may keep one demat account for equity delivery and another for equity intraday trading.
Better Market Insights
Brokerage houses generally publish research reports and offer free stock/ mutual fund recommendations for registered customers. When you have multiple demat accounts, you can access recommendations or research reports of multiple DPs or stockbrokers. As a capital market investor, you must keep track of the latest happenings in the industry, and the more you know, the more you can grow. Hence, multiple demat accounts expose you to a plethora of information you can use to sharpen your knowledge and understanding.
Diversity Means Safety
Although brokerage houses rarely go bankrupt or wind up their operations, the chances are always there. Having multiple demat accounts is imperative since it minimises your risks by diversifying your assets across brokers. However, your shares or mutual fund units are always safe since they are stored securely in your digital account controlled by CDSL or NSDL. CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited) are overseen by the Indian government.
These firms maintain investors’ shares, and even if a brokerage house shuts off its operations, investors’ shares are always one hundred per cent safe.
What are the disadvantages of opening multiple demat accounts?
Although the answer to the question, ’Can I have multiple demat accounts?’ is ‘Yes.’ you must exercise caution for the following reasons:
Higher Fees
Every time you open a demat account, the stockbroker charges an account opening fee. Moreover, you have to pay transaction charges, account maintenance charges, etc., on all demat accounts opened by you. The higher the fees, the lower your profit will be. Hence, before opening multiple demat accounts, you must check the fees and charges well.
Confusing User Interface
While all Indian stockbrokers provide the same kinds of services, the user interface (read, trading app layout) might be different. Hence, an investor might feel confused understanding the different layouts for trading.
Maintaining Multiple Demat Accounts May be a Hassle
Although there are more than one benefit of multiple demat accounts, if you do not maintain some accounts, respective stockbroker may freeze your account. And, every time account freezes, you have to approach stockbroker to revive your account. All of these may lead to additional hassles.
Managing multiple Demat accounts
Managing multiple Demat accounts can offer several benefits, such as better organization of investments and access to diverse market insights from different brokers. It allows investors to segregate their trading and long-term investments, making it easier to track performance and manage portfolios.
However, it also comes with challenges like higher maintenance costs and potential for confusion if not managed properly. It's crucial to stay compliant with SEBI guidelines and ensure transparency in all transactions. Overall, while multiple Demat accounts can enhance investment strategies, they require careful management to avoid complications.
The EndNote
While the straightforward answer to ‘Can I open two demat accounts?’ is ‘Yes,’ you must read the terms governing each account and open multiple demat accounts only when you are sure that the benefits will outweigh the disadvantages. 5paisa offers ultra-low brokerage and power-packed features to ensure maximum features at minimum cost. Click on this link to experience next-gen stockbroking services.
More About Demat Account
- DDPI - Demat Debit and Pledge Instruction: Overview
- How to Find Demat Account Number from PAN
- How to fill a Dematerialisation Request Form
- How to Convert Physical Shares into Demat?
- What Is DP ID In The Demat Account
- What Is Dematerialization of Shares?
- What Is a Demat Account Holding Statement?
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- How to Close Your Demat Account Online
- How to Open Demat Account Without Aadhaar Card
- Open Demat Account Without A PAN Card - A Complete Guide
- Myths & Facts about Demat Account
- What Is Collateral Amount in Demat Account?
- What Are DP Charges?
- How to Link Aadhaar Number With Demat Account?
- How to Convert Demat to BSDA?
- Dos and Don'ts of Demat Account
- Difference between NSDL and CDSL
- Advantages and Disadvantages of Opening a Demat Account
- 5 Things to know About Loan Against Demat Shares
- What is NSDL Demat Account?
- NRI Demat Account Opening Process
- What is a Basic Service Demat Account?
- How to Transfer Money from Demat Account to Bank Account
- How to know your Demat Account Number
- How to Buy Shares through Demat Account?
- How many Demat Accounts one can have?
- Demat Account Charges Explained
- Eligibility to Open a Demat Account
- How to Transfer Shares from One Demat Account to Another?
- Types of Demat Account in India
- Dematerialisation & Rematerialisation: Meaning and Process
- Difference between Demat and Trading Account
- Demat Account Nomination - How to Add Nominee
- How to Use of a Demat Account
- Benefits of a Demat Account
- Documents Required to Open a Demat Account
- How to Open Demat Account Online?
- What is Demat Account? Read More
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
In India, it is possible to have more than one demat account. However, keep in mind that each broker or depository participant may only accept one demat account per user.
Yes, you can have 4 Demat accounts as there is no legal limit on number of Demat accounts individual can open. However, each Demat account must be with different Depository Participant (DP). While having multiple accounts can help diversify your holdings, it also means managing separate account maintenance fees & keeping track of investments across all accounts.
Yes, as Per SEBI, you can link two or more Demat accounts with same bank account.