If you want to trade in financial securities like stocks, bonds, and mutual funds in India, you must have a Demat account. A Demat account holds all your financial security holdings in dematerialised form. It also contains a record of your security transactions and changes in ownership when you buy or sell.
A Demat account is provided by banks and Depository Participants (DP). An individual without a Demat account cannot trade in securities. Along with a Demat account, you also need a trading account that provides the interface to buy or sell securities. Let’s find out more about a Demat account.
Can an individual have more than one Demat account?
Rules To Know If You Have Multiple Demat Accounts
- If you need to open multiple Demat a/c, you must open them with different DPs. To open your Demat account, click here.
- To open multiple Demat a/c with the same DP, the account holder must be different.
- There are separate charges for each Demat account you hold. You can opt for a Zero Brokerage Plan as well.
- You need to pay an Annual Maintenance Charge for every Demat account, even if you don’t use it.
- There is no need to open multiple trading accounts with multiple Demat a/c.
Advantages Of Having Several Demat Accounts
- Multiple Demat a/c help in segregation. You can have different accounts for various purposes, like one for trading and another for investment.
- When you have many Demat accounts managed by multiple different brokers, you get access to numerous perspectives, investment tips, consultations, and advisories from multiple trading firms. This helps you benefit from a variety of research and analysis.
- You can benefit from the several offers provided by different Demat accounts; if one account offers lower charges for long-term investments, you can make all your long-term investments through that account.
- It also helps widen your portfolio. For instance, if you want to apply for an IPO, you can apply once using each Demat account, increasing the probability of allotment.
Drawbacks of having several Demat accounts
- In case one of your Demat accounts is inactive beyond a certain period, it gets frozen. You will have to fulfil the KYC formalities to activate a frozen account.
- You must link your Demat accounts with PAN and Aadhaar. In case it is not linked properly, you might face trouble in retrieving your holdings.
- Tracking the multiple different Demat accounts could be quite a task, if you are an active trader.
- It requires time, effort, and money to maintain multiple Demat a/c.
Legally, you can have as many Demat accounts as you want. Nevertheless, it is best to consolidate them into 2 or 3 accounts for seamless transactions and easy management, depending on your investment portfolio. So weigh the pros and cons carefully before you decide to have multiple Demat accounts.
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