Can a person have multiple demat accounts in India?

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Short Answer

Yes, one can have multiple demat accounts, but there is a restriction: you cannot open more than one demat account with the same depository participant (DP) or broker. Instead, you can open other demat accounts with different brokers.

Detailed Answer

What is a demat account?

A demat or dematerialised account is just like a bank account. A Demat account is used for holding shares and other securities in electronic form. Before demat accounts, all the stocks and other securities were stored and exchanged through physical certificates.

Where to open a Demat account in India?

There are two types of brokers in India where you can open a demat account.

1. Full-time brokers:

A full-time broker offers both online and offline services. They offer a wide range of financial services to their clients, conduct extensive research, and offer advice in exchange for a hefty fee.

2. Discount brokers:

Discount brokers, also known as online stock brokers, give customers a platform to buy and sell stocks at lower commission costs. They don't offer research or financial advice to their customers.

In India, one can choose to open a demat account with a full-time broker or a discount broker. However, discount brokers are growing in popularity because it takes very little time to open an account with them and they also offer their services at very low rates.

Documents required to open a demat account

  • An address proof, such as a driving license or an Aadhar card.
  • A valid PAN card (mandatory)
  • A mobile number associated with an Aadhar Card
  • A bank proof, such as a cancelled check or the front page of a book.
  • Signature on white paper.
  • A recent passport-size photo.

Can a person have multiple Demat accounts?

Yes, a person can have multiple demat accounts. There is no limit on the number of demat accounts. However, you must open your accounts with different brokers; you cannot open more than one account with the same broker.

Things to keep in mind before opening multiple Demat accounts

  • Demat accounts come with charges like maintenance fees and other charges. It is important to check these charges before opening a demat account with any broker.
  • When opening multiple demat accounts, make sure not to leave them unused for an extended period of time. It may be declared as a dormant account and you will have to pay a reactivation fee along with all the maintenance charges with interest.
  • Maintaining multiple demat accounts and all the investments becomes very challenging over time.

Therefore, it is critical to consider all the factors before opening multiple demat accounts to avoid future problems.

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Categories: Demat
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