Get to Know If It Is Possible to Have Multiple Demat Accounts | Espresso

Is it Possible to Have Multiple Demat Accounts?

If you are thinking of opening multiple Demat accounts online, then you are on the right page. While the Securities and Exchange Board of India (SEBI) permits the opening of multiple Demat accounts by one investor, there are many other things that you need to know before you get going. In this article, we will talk about everything that you need to know about opening multiple Demat accounts in India.

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What is a Demat Account?

A Demat Account is an account where you can store securities in a digital format. Demat accounts online can be opened with a Depository via a Depository Participant or DP. There are two depositories in India – NSDL and CDSL. Each of them has numerous DPs that offer Demat accounts.

Opening a Demat account online is easy. With e-KYC, all you have to do is fill the account opening and KYC forms, submit your documents like PAN Card, Proof of Identity, Proof of Address, photographs, and Proof of Bank Account to open the Demat account.

Understanding Demat Accounts and Trading Accounts

While Demat accounts online hold shares, if you want to buy or sell them in the market, then you need to open a trading account with a stockbroker. The stockbroker needs to be registered with a stock exchange like the NSE or BSE.

When you trade using your trading account, the Demat account is linked to allow your credit/debit of shares as per your order. If you are an intraday trader, then you will not take deliveries of shares. This means that your Demat account will not have many transactions. However, if you believe in investing in shares for the long term, then you will use your Demat account to hold shares.

Opening Multiple Demat Accounts

To reiterate, SEBI allows investors to open multiple Demat accounts online. There are various scenarios under which you might want to open multiple Demat accounts under the same name. Here are some things that you need to know before opening multiple Demat accounts:

  • Multiple Demat accounts cannot be opened with the same DP.
  • If you don’t use your Demat account for a period specified by the DP, then the account can be ‘frozen’. To unfreeze the account, you might be required to fulfil KYC requirements again.
  • There are various charges associated with a Demat account. Apart from the account opening charges, you will have to bear annual maintenance charges regardless of whether you use the account or not. Across multiple Demat accounts, these charges can add up to a sizeable amount.
  • Many people open multiple bank accounts for the safekeeping of their funds. This does not hold true for Demat accounts. This is because your holdings are secured by the depository (NSDL or CDSL).
  • There are many benefits of opening multiple Demat accounts, too, like:

    You can segregate your trading and investing portfolios and track them more efficiently.

    You can benefit from multiple research reports offered by different DPs.

While you can open multiple Demat accounts online with different DPs, it is important to think about why you want to open these accounts. Since Demat accounts can be opened easily and many DPs are offering free Demat account opening, it is easy to get carried away and open multiple accounts. However, it is important to remember that Demat accounts have charges, and opening too many accounts can make tracking your investments difficult. Hence, think well before opening multiple Demat accounts.

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Opening multiple Demat accounts is particularly beneficial for investors who participate in intraday trading and invest in securities for the long-term too. Multiple accounts can help them keep the portfolios separate and track investments efficiently. Also, investors can benefit from the research reports offered by different DPs.

There can be several disadvantages of opening multiple Demat accounts like:

  • You will have to pay multiple annual maintenance charges.
  • If you don’t use an account for a period specified by the DP, then your account can get frozen, and you might have to provide KYC documents again to activate your account.

The only thing that you need to keep in mind is that you cannot open multiple Demat accounts with the same DP. So, if you want to open multiple Demat accounts, then you will have to open them with different depository participants. Also, you might have to submit the account opening and KYC forms and go through all account opening formalities again with the new DP.