Can You Open Multiple Demat Accounts in India? Rules, Benefits & Tips

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). Along with this account, you also need a trading account that provides the interface to buy or sell securities. Let us 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 accounts, you must open them with different DPs. To open your demat account,
  

• To open multiple demat accounts 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 accounts.
  

Advantages of Having Multiple Demat Accounts

• Multiple demat accounts help in segregation. You can have different accounts for various purposes, like one for trading and another for investment.
  

• When you have multiple demat accounts managed by 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 different 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.
  

• Maintaining multiple demat accounts helps spread your investments across different brokers, reducing the risk of operational failure or technical issues affecting your entire portfolio. If one platform experiences downtime or glitches, you can still access and manage your holdings through other accounts.
  

• By segregating trading and long-term investment activities into separate demat accounts, it becomes easier to track capital gains, losses, and dividend income. This can simplify tax filing and help you optimise your tax planning strategy more efficiently.
  

Drawbacks of Having Multiple 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 account.
  

• With multiple demat accounts, there is a chance of holding the same stocks across accounts without realising it. This can lead to portfolio duplication, making it harder to assess diversification and manage risk effectively.
  

• Managing multiple accounts may cause you to miss crucial communications like dividend declarations, stock splits, or corporate actions if you are not regularly checking all associated emails and notifications from each broker.
  

• If each demat account has a different or no nominee registered, it could lead to complications for your heirs in case of unforeseen events. Ensuring consistent nominee details across all accounts becomes an additional task.
  

Who Should Have Multiple Demat Accounts?

Investors who actively trade and invest across various strategies may benefit from having multiple demat accounts. For example, if you wish to separate your long-term investments from short-term trades, maintaining different accounts helps with better organisation and clarity.

High-volume traders, portfolio managers, or those applying frequently for IPOs may also consider multiple accounts to maximise allotment chances. Investors who want to benefit from varied brokerage services, research tools, and fee structures can also open accounts with different brokers.

Moreover, those exploring different asset classes or trying new platforms without risking their primary holdings may opt for multiple accounts. However, managing multiple accounts effectively requires discipline, regular monitoring, and attention to compliance requirements like KYC and nominee updates.

When to Stick with a Single Demat Account?

If you are a passive investor or someone who prefers a simple, low-maintenance approach to investing, sticking with a single demat account is ideal. A single account reduces the administrative burden of managing multiple passwords, statements, and compliance requirements. It also simplifies portfolio tracking, tax filing, and capital gains calculations.

Beginners and long-term investors who focus on buy-and-hold strategies do not need multiple platforms. If you are satisfied with your current broker’s services, charges, and tools, there's little advantage in opening additional accounts.

A single demat account also reduces the risk of confusion, duplication, or missed updates. It keeps your investment life streamlined and manageable while avoiding unnecessary paperwork, account charges, or complications during nominee registration or account transfers.

How to Manage Multiple Demat Accounts?

Managing multiple demat accounts requires organisation, discipline, and regular oversight. Begin by maintaining a record of all account details, including login credentials, broker names, linked bank accounts, and registered email IDs.

Use digital portfolio trackers or spreadsheet tools to monitor holdings across accounts. Assign specific purposes to each account – for instance, one for long-term investments, another for trading, and a third for IPO applications. Always ensure that all accounts are linked to your PAN and Aadhaar to avoid regulatory issues.

Periodically review each account’s activity and close any account that remains unused or redundant. Stay updated on communications from each broker, including dividend credits, corporate actions, or KYC reminders. Ensure consistent nominee details across all accounts to avoid future complications.

Lastly, regularly reconcile your statements and consider consulting a financial advisor for optimising multi-account strategies.

Conclusion

Legally, there is no limit to the number of demat accounts you can hold, as long as each account is linked to your PAN number. However, from a practical standpoint, it is wise to limit the number of demat accounts to two to three based on your investment needs and trading activity. Consolidating your holdings helps in easier tracking, better compliance, and simpler tax reporting. Multiple accounts can offer flexibility and diverse benefits, but they also come with added responsibilities. So, carefully weigh the advantages and drawbacks before deciding to maintain multiple demat accounts for better portfolio management.

Read more:

https://www.kotaksecurities.com/investing-guide/demat-account/documents-required-for-demat-account/

https://www.kotaksecurities.com/investing-guide/demat-account/how-to-open-a-demat-account/