Having a demat account is the basic requirement to transact in the Indian financial market. A demat account holds your shares and securities in an electronic format. Prior to 1996, shares and securities were held in the form of physical share certificates. Back then, it involved various issues like problems of fake and forged shares, bad deliveries, loss of share certificate and entire process of trading and investing was very lengthy. Introduction of demat account helped overcome these issues and made trading and investing an easy task.
Since having an open demat account essential to trade or invest in the India stock market, you must know how many demat accounts you can open.
Is it Legal to Open Multiple Demat Accounts?
Yes, it is legal to open multiple demat accounts. As per the law, there are no restrictions regarding the number of demat accounts that can be opened by you. However, while opening multiple demat accounts, there are a few things that you must know.
Things to Keep In Mind While Opening Multiple Demat Accounts
• Before opening more than one demat account, you must know that you cannot have multiple demat accounts with the same broker or depository participant (DP). Hence, if you currently have a demat account with a stock broker, you cannot open another account with the same broker.
• You have to pay annual maintenance charges (AMC) for every demat account you open. The charges vary from one broker to another. These charges are required to be paid irrespective of the fact that you carry out any transaction in them or not. The charges range between Rs. 700 to Rs. 1,000 annually.
• If you are a trader as well as an investor, multiple demat accounts can be helpful to you. With multiple trading and demat accounts, you can easily segregate your trading and investment portfolio.
• Every broker provides different services that vary from other brokers. By opening multiple demat accounts, you can avail of these services and get access to various products offered by these brokers.
• If you keep any of the multiple demat accounts unused beyond a particular period, there are chances that your demat account would get frozen. You need to get your eKYC done again to reactivate the account.
• Regular monitoring of the balances and transactions is required when you have multiple demat accounts.
• It is safe to open multiple demat accounts with stockbrokers because your shares are held with the depository. In India, there are two depositories i.e. National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL).
• With multiple demat accounts, there is no need to open multiple trading accounts. Trading account functions similarly to the demat account that is used for investing and trading in the share market. The trading account is however essential for buying and selling of shares.
The above mentioned are a few points that you must keep in mind while opening multiple demat accounts. If you are beginners or want to open multiple demat accounts, you may consider opening a demat account with Indira Securities. We provide premium broking services at affordable rates.
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