A Demat account is one of the mandatory accounts an investor or an aspiring investor needs to hold so that they can hold all their shares and securities in a digital form. This makes trading in the share market quite convenient for investors. There are two depository organizations in India that maintain the Demat accounts. The depositories are National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). Once a Demat account is opened with a registered broker you can buy shares and all other kinds of financial instruments online.
How Many Demat Accounts Can We Open?
The Securities and Exchange Board of India (SEBI) does not impose any limitation on opening more than one Demat account in India. An investor can open more than one Demat account with multiple brokers with a valid PAN Card. All the Demat accounts must be linked with a valid PAN card properly in order to store all investment data could be stored in SEBI’s central database system. SEBI tracks all the financial holdings of an investor through PAN.
Legitimacy Of Holding Multiple Demat Accounts
Although it is completely legit to open multiple Demat accounts, one is not allowed to open multiple Demat accounts with the same brokerage firm. Every time an investor opens a new Demat Account they need to fulfill KYC requirements. Investors can open their Demat accounts with full-time brokers and discount brokers at the same time.
What Is The Need For Multiple Demat Accounts?
Holding multiple Demat accounts makes trading easier for a person who is both a long-term investor and a trader. It enables them to keep good track of their transactions at the stock exchange. Trading gets quite convenient when an investor can keep trading securities in one Demat account and the other financial instruments in the other Demat accounts. Some selected investors might prefer to store their investments depending on their objectives, terms, stock type, etc. the investor can further manage their securities without any confusion with multiple Demat accounts.
Merits Of Multiple Demat Accounts
- You can easily avail of the services of different brokers by opening multiple Demat accounts with different brokers. The variety of research reports that you will receive from different brokers will help you to trade efficiently and also you get exposure to multiple trading platforms.
- You can keep good track of your transaction as multiple Demat account facilitates segregating trading portfolios and investment portfolios.
- It is unimportant to open multiple trading accounts to have multiple Demat accounts as you can link multiple Demat accounts to one trading account
- Tracking gets easier as the objective of intra-day trading is not to own the stocks rather it is to make profits by gaining the benefits of price movement during the day.
Demerits of multiple Demat Accounts
- An Average Maintenance Charge (AMC) is imposed by every broker for every Demat account an investor holds even if the account holder is keeping the Demat account unused.
- A broker can freeze a Demat account if the investor keeps a Demat account unused. In case the KYC formalities are completed again the Demat account remains active.
- Monitoring multiple Demat accounts is a hassle for the investors and in order to monitor those they might end up integrating all idle Demat accounts.
Multiple Demat accounts demand care and attention to save them from fraudulent activities and situations. Multiple Demat accounts are more favorable to