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Can A Person Have Multiple Demat Accounts In India?

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This question comes up often, especially from people just starting out in the markets. The simple answer is yes, you can have more than one demat account. The only condition is that each account must be opened with a different broker or Depository Participant (DP).

Now, why would someone do that? I can share from my own experience. At one point, I found it easier to keep my long-term holdings in one account and use another for short-term trades. It gave me clarity. But it also meant extra paperwork, additional charges, and more reminders to keep track of. So while it is allowed, managing multiple accounts requires a bit more effort.

Legality of Holding Multiple Demat Accounts

Some people think SEBI might not allow more than one account. That’s not true. It’s completely legal, but you need to follow a few rules:

  • Each account must be with a different broker. You can’t open two with the same one.

  • All accounts must be linked to your PAN. This keeps your records clean and transparent.

  • Each account has its own AMC. Even if you don’t use an account, you’ll still pay its annual maintenance charge.

  • Inactive accounts may be deactivated. If you leave one idle for too long, it might be frozen.

  • Tax reporting applies across all accounts. Every profit, loss, or dividend must be reported.

From what I’ve seen, opening multiple accounts is not difficult, but keeping them active and compliant does take attention.

Key Rules for Holding Multiple Demat Accounts

Having more than one demat account feels like a way to organise your strategies, but each account brings its own set of obligations.

The advantage? Clarity. You can separate intraday trading from investments you plan to hold for years. That prevents mistakes like selling your long-term holdings by accident.

But here’s the catch – it increases paperwork. You’ll have more brokerage fees and more to declare in tax filings. If you don’t use one of the accounts much, paying AMC can feel wasteful. I’ve even seen people forget which account they used for an IPO, only to miss the allotment details later.

Things to Know About Opening Multiple Demat Accounts

Before opening another account, ask yourself why you want it. If it’s to separate trading from investing, fair enough. But if it’s just because a broker offered “free account opening,” remember that free doesn’t always mean cost-free.

Every account brings maintenance charges and statements. You will have to monitor balances and the source of fee deductions. While keeping the strategies separated is helpful, the added complexity is also real - more logins, reports and items to manage.

Requirement for Multiple Demat accounts

If you decide to maintain multiple Demat accounts, there are a few requirements. 

  • Depository participants: You must hold your accounts with different Depository Participants (DPs) or brokers.

  • PAN Card Linking: All your accounts must be linked to the same PAN card.

  • KYC documentation: KYC needs to be completed for each account on its own.

  • Maintenance of active accounts: Don’t just leave an account dormant, it may be frozen.

  • Regulatory compliance: Income from all accounts must be declared.

It sounds like a lot, but it’s really just about being disciplined and staying organised.

Advantages of Multiple Demat Accounts

From my own experience, there are a few clear benefits:

  • Portfolio diversification: Keep trades and investments separate for easier tracking.

  • Access to different brokerage tools: Some brokers offer better research, others specialise in derivatives. Multiple accounts let you use both.

  • Reduced risk: By spreading investments, you avoid depending too much on one broker.

  • More flexibility of strategy: Traders often keep leveraged positions separate from core holdings.

  • Cost flexibility: Frequent traders can pick brokers based on lower fees.

Disadvantages of Maintaining Multiple Demat Accounts

There are also several disadvantages, and I’ve felt them myself:

  • Increased costs: Every account has AMC and transaction charges associated with it adding up.

  • Increased complexity: More accounts is more logins, more statements and more time spent on tracking.

  • Increased compliance: Every account needs to remain up to date with KYC amounting to simply more paperwork for you, and just forgetting to update a single account can block access.

  • Increased risk of dormancy: You forget to use an account and your account may be frozen, and the delay and time spent reactivating it will require paperwork.

Limits of Having Multiple Demat Accounts

Having numerous accounts may give the initial appeal of having more organised control and assets, but they do not potentially create layers of issues and organisation.

  • Excess admin: You now have multiple statements, AMC's, multiple charges and multiple corporate actions to track.

  • Excess maintenance fees: Paying AMC on inactive accounts just seems like a waste of money (until they are actually used).

  • Increased taxation and compliance requirements: You will need to collect all the details from each account and calculate and consolidate the context and implications for your taxes - you can miss something in one account and it completely calculates all your tax returns.

  • Excess dormancy risk: Dormant accounts have the potential of being frozen and having a various states of reactivation process.

  • Portfolio management confusion: If your money is spread too thin with too many investments and accounts then seeing your overall investments could also be blurred by excess accounts.

Effective Ways to Manage Multiple Demat Accounts

Keeping organised will allow you to manage multiple accounts. Here’s what I do:

  • I check my accounts regularly. This means logging in frequently to check holdings and catch any mistakes early.

  • I use a portfolio tracker. Integrating all of my accounts into one view saves time.

  • I close unused accounts. If I’m not using it, I close it to avoid fees.

  • I automate payments. The auto-debit setup for AMC means I won’t miss payment dates, avoiding late fees!

  • I align my accounts with my strategies. One account for trading, the other for long-term investing. This keeps things clear.

Conclusion

Yes, holding multiple demat accounts in India is legal. It can be practical too – letting you separate strategies and enjoy varied services.

But it comes with costs, paperwork, and effort. My advice? Weigh the benefits against the hassle. If you have a clear reason and can manage them well, multiple accounts can help. If not, keeping one well-maintained account may save time and give you peace of mind.

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