Indian stock markets have always functioned in the direction of offering better features, a smoother customer experience, and incorporating new-age technology into the system. India’s trading system was revolutionised by introducing the depository system, which was mandated by SEBI’s “Depository Act of 1996”. Through this act, the earlier method of Open Out-Cry, where the investor was supposed to be physically present on the trading floor along with the physical share certificate, was stopped, and dematerialisation was introduced; hence physical share certificates were replaced by the dematerialised format. These dematerialised shares were stored electronically in a Demat account in dematerialised form. SEBI has made it mandatory to convert all shares into dematerialised form if the investor wants to trade them. Physical share certificates were rendered non-tradable. Investors often come across questions If they can open more than one Demat account.
What is a Demat account?
After the introduction of the “Depository Act of 1996” by SEBI, Demat accounts became an essential part of the dematerialisation process, and thus by virtue of it, Demat accounts became a critical element of the whole Stock Market. Demat accounts essentially store all of the shares in an electronic form. The Trader can buy, hold or transact Financial Securities without fuss about handling the physical securities.
The whole dematerialisation process has four components to it:
- Depository participant, and
- Beneficiary Owner
A depository participant is an agent of the depository that provides an interface to connect between the investor and the depository; usually, entities such as stock market brokers or banks function as depository participants.
Financial securities can be stored electronically in the depository. National Securities Depository Limited (NSDL) and Central Depository Limited (CDSL) are the two licensed Depositories registered with SEBI in India.
Can A Person Have More Than One Demat Account in India?
It seems to be a very simple question that can come into the Investor’s mind quite often that “Can I open more than one Demat account?” and is it legal too?
It is legal and normal for a person to have multiple Demat accounts. To open more than one Demat account, you would need to link your PAN card to each of them. The PAN allows the Indian regulators to link your investment assets, no matter how many Demat accounts you have.
Depository participants such as stock market brokers and banks help you open a Demat account.
Things to Know About Opening Multiple Demat Accounts
Opening multiple Demat accounts is an easy process, but it does come with things to keep in mind, such as
- You are allowed to open as many Demat accounts as you can but only with different depository participants. You can only open one Demat account with one depository participant.
- If you want to open different accounts with the same depository participant, you can but with different account holders.
- Hence, to open multiple accounts, you would need to open all of them with different DPs.
- Each Demat account will require a separate annual maintenance charge. The DP will charge you this amount even if your account is dormant. The charges vary from Rs 700-1000
Also Read: How to Open a Demat Account?
Advantages of multiple Demat accounts
A Demat account largely works like a bank account where shares you purchase are credited, and the shares you sell are debited. Just as we use multiple savings accounts to save and invest our money. Multiple Demat accounts help to diversify our investments by storing them in a different account. There are a couple of more advantages, such as
- Segregation of Portfolio: Since securities have multiple purposes, some securities are used as an investment while others are used for trading. Having multiple demat accounts helps you in the segregation of securities; you can use one account for long-term investing and one for short-term trading in each of the demat accounts. This way, you can plan your investing better, not only in terms of securities but also in terms of money inflow and outflow too smartly.
- Multiple insights from different brokers: With multiple Demat accounts comes multiple insights and perspectives on buying and selling stocks. These usually can be multiple stock reports by different brokers or different data presented to you on the interface’s dashboard.
- Portfolio Widening: With more than one Demat account, you can easily widen your portfolio, this gives you an edge by allowing you to have golden tickets for IPOs and Government Securities.
- Easily track price movements: Intraday trading owes its profits not to holding on to stocks but to trade on the price movements. Multiple Demats with different brokers allow you to capture the best possible price moment.
Demat account holders often face questions about holding more than one Demat account such as: “ Can we have multiple Demat Accounts” or “ Can I open multiple Demat accounts online”. While you may be able to open more than one Demat account online, one should stick to the minimum number of Demat accounts possible. Each Demat account will need constant monitoring and attention which could be time-consuming. With Our Demat accounts, you get access to Quality Research, in such a way that you would not need to open multiple Demat accounts for it,
Can I have 2 Demat accounts in India?
Yes, you can have 2 Demat accounts in India, just not with the same depository participant.
Is it legal to have 2 Demat accounts?
Investors are legally allowed to open multiple Demat accounts as long as they are linked or opened using a single PAN card.
Can I open multiple Demat accounts with the same mobile number?
If you wish to open multiple Demat accounts using the same mobile number it has to be with different depository participants, you can not open them with the same one.
Can I have 2 Demat accounts linked to the same bank account?
Since banks also function as depository participants you can not link 2 Demat accounts with the same bank