Is It Possible To Have Multiple Demat Accounts?

Is It Possible To Have Multiple Demat Accounts?

A Demat Account is absolutely essential if you want to trade in the Financial Markets of India, especially if it includes online trading. It helps you finance and saves shares for both long term and short term in an electronic format. A Demat Account is always opened with a Depository Participant. We are sure that there are a few questions pertaining to Demat Accounts in your mind. One of them is, is it possible and legal to have multiple Demat accounts in India? The answer to that question is, YES!

A person can open multiple Demat Accounts in India without facing any legal problems. The process of opening a Demat account is fairly easy. You simply need to fill a form and attach all the necessary documentation. Once the verification is complete and the application is processed, your Demat account is opened and ready to be used. One of the documents that need to be verified while opening a Demat Account is the PAN card and each person is issued with only one PAN Card. It is legal for a person to open multiple Demat accounts registered under the same PAN card.Be that as it may, there is a condition appended to it. You can’t have numerous Demat accounts or different exchanging accounts with a single Depository Participant (DP) or a similar broker. In this way, in the event that you have a Demat account or trading account with a DP or dealer, you can’t open another accountwith them.The next question that comes to mind after this is, are there any pros or cons when it comes to opening multiple Demat accounts?

When it comes to the advantages of opening more than one Demat accounts, frankly speaking, there aren’t many. The main advantage worth referencing is that you can isolate your long-term investments and short-term/frequent trading in different accounts. For instance, You can keep the stocks that you’ve bought with a longer-term goal in one Demat account and your stocks with short-term goals in another account. This will assist you with avoiding disarrays and acquire discipline in your venture.

Sadly, the list of disadvantages of having multiple Demat accounts is a little longer than that of advantages. Few major disadvantages worth mentioning are:

  1. Paying the Annual Maintenance Charges (AMC) for all your Demat Accounts is compulsory: The AMC for Demat Accounts vary depending on your broker. And as mentioned above, multiple accounts need to be opened through multiple brokers. So get ready to pay multiple AMCs if you have multiple Demat accounts.
  2. Keeping a track of multiple Demat accounts is difficult: Continuously tracking multiple Demat accounts simultaneously can be difficult. It is very easy to overlook certain important things amidst the confusion. Hence, one Demat account for all your transactions is preferred and advised by the experts. And if you still insist on having multiple accounts, it is advised to have one for your trading activity and one for your portfolio. As it is efficient to handle.
  3. A long period of inactivity may lead to the account being frozen: Multiple accounts mean multiple credentials to remember. It is very common to forget the login id and password. And if the Demat accounts are unused beyond a certain period of time, the depository will freeze your account. You will not be permitted to transact on that Demat account unless the KYC formalities are completed again. But ofcourse, your receive notifications from your broker before they freeze your accounts and your stocks can be recovered even if your account is frozen. Nevertheless, make sure you are active on all your Demat accounts to avoid any inconvenience.

So coming back to the question that started it all, is it possible to have multiple Demat Accounts in India? The answer is yes. But it has consequences in terms of costs and statutory compliances. The bottom line is, sure, go ahead and open multiple Demat accounts for trading purposes but before you do so make sure you take into consideration the pointers mentioned above before opening multiple accounts.

Donald Phillips