If you are keen on the stock market or are an investor or trader, you must know that the free Demat account is indispensable for trading and investments. However, have you ever wondered whether you can open multiple Demat accounts or how many Demat accounts one can open?
If this question has come to your mind, or you are thinking about opening multiple Demat accounts but are unsure of the legality and process, here is an article to guide you about multiple Demat accounts in India.
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How Many Demat Accounts One Can Open?
So, if you want to open a Demat account online, when you already have one and are wondering how many Demat accounts you can open, the answer is unlimited. Yes, you can open multiple Demat accounts. However, you need to keep in mind that these Demat accounts have to be with different stock brokerage houses. In simple words, you cannot open two Demat accounts with one stockbroker.
So, while you can open multiple Demat accounts, this means, you need to find multiple brokerage houses that provide the services you require to open a Demat account with them.
Is it Legal to Open Multiple Demat Accounts in India?
Yes, in India, it is legal to open multiple Demat accounts. You can open as many Demat accounts as you want. There are no restrictions from SEBI or any stock exchange or Depositories in the country. However, you will have to link the same PAN with all the Demat accounts.
The reason behind linking the PAN with all the Demat accounts is to give the right information to the SEBI and IT department about your assets, investments, and other holdings. So, to make all your Demat accounts legal, you need to link them to one PAN.
What are the Pros and Cons of Opening Multiple Demat Accounts?
If you are wondering whether it is good or not to open multiple Demat accounts, here are the advantages and disadvantages of the same.
Pros of multiple Demat accounts
- Firstly, if you have multiple Demat accounts, you can segregate your assets accordingly. Suppose you invest heavily in equities and a little bit in bonds and commodities. So, you can open one Demat account for all the equity holdings, while the other Demat account will hold the bonds, commodities and other assets you invest in.
- Then having multiple Demat accounts can give you an upper hand when it comes to brokerage charges. You may find that brokerage houses charge different brokerage for different segments. Suppose the brokerage house with which you have your Demat account offers a cheap brokerage rate for equity intraday but very high brokerage for commodities or options, you can find another brokerage house for opening another Demat account which can reduce the brokerage charges on commodities and options while you continue to hold equities in the previous Demat account only.
- Multiple Demat accounts also help you get access to different resources, trading tools, and technical analysis tools of different brokerage houses. This can elevate your trading experience to the next level.
- While your securities are safe with CDSL and NSDL, if you have multiple Demat accounts, you do not have to worry even if one brokerage house functions poorly or shuts down due to any issues. You can transfer all your holdings to the other Demat account/s.
Cons of having multiple Demat accounts
- If there is an annual maintenance fee to be paid for the Demat accounts, then having multiple Demat accounts means higher fees, which can have a negative impact on your actual returns.
- If you are a novice investor, having multiple Demat accounts may be confusing. As the trading platforms will be different, different fees structure and others can lead to confusing and dangerous trades.
Final Thoughts
So, if you need multiple Demat accounts and have the confidence to handle them well without any hassle, then you can open multiple Demat accounts anytime. All you need to keep in mind is that you can open different Demat accounts with different brokerage houses, and you need to link the PAN with all the Demat accounts.