Everything You Need To Know About Multiple Demat Accounts In India
Demat account is one of the primary prerequisites for investing in the stock market and can be opened online to store your financial securities in electronic form. For the investors asking – can I have multiple Demat accounts – the answer is a resounding YES. It is completely legal in India to have multiple Demats. It is the choice or need of an investor to open more than one Demat account. There is no limit to opening multiple Demat accounts.
It is recommended to open two Demat accounts. One is for investing and another for trading. You can open a third Demat account also for commodities, futures and options. Or you can categorize your Demat accounts by investment objectives to be fulfilled by short term and long term investments. This will also help you in keeping the trading separate for taxation purposes.
There are a few important things regarding multiple Demat accounts that an individual should know before opening a Demat account online.
Stock Exchange Board of India (SEBI) does not allow you to open multiple Demat accounts with the same depository participant (DP) or stockbroker. If you need one or more Demat accounts, choose different DPs.
Link to Savings Account
You can link your multiple Demat accounts with a single savings account. You do not need to open different savings accounts or different Demat accounts.
NRI Demat Accounts
An NRI is also allowed to open multiple Demat accounts in India however, in this case also, each account needs to be opened with a different DP.
Initial Public Offering (IPO)
An investor, who has multiple Demat accounts with his/her PAN card, is allowed to apply for an IPO once only. Having multiple Demat accounts does not mean that you can fill multiple applications for an IPO. To apply for an IPO with multiple applications, you can open Demat accounts in the name of your family members.
Demat Account Cost
Demat accounts involve annual maintenance charges that are charged annually. It is a nominal charge for the services provided by your broker. You will need to pay this charge separately for each of your Demat accounts. Other charges of Demat i.e. Debit/Credit transactions cost, Dematerialisation/Rematerialisation cost will vary across the brokers.
Inactive Demat Accounts
Maintaining multiple Demat accounts may lead to some accounts become inactive due to no activity. Beyond a certain period, the idle Demat will be frozen and you will not be able to transact on this Demat account. You can revive it again by updating your KYC documents. Make sure your Demat account is updated with your latest contact details (email, phone number), so that you do not miss important communication with respect to your Demat account.
If you have multiple Demat accounts and want to consolidate them. You can do so through off-market transactions. All securities in different Demat accounts will be transferred to one Demat account. For that, you need to fill the Debit Instruction Slip (DIS). Certain charges will be levied by the stockbroker for the off-market transfer of shares.
Regular Check on transactions
You own multiple Demat accounts. It is necessary to check the debited and credited securities closely in each Demat account to avoid fraudulent activities. Open Demat account online with registered Depository Participants. The list of depository participants can be checked on the website of depositories, like CDSL and NSDL.
The Bottom Line
Multiple Demat accounts are convenient to segregate your trading transactions and investment transactions and keep your trading portfolio separate from the investment portfolio. Determine your requirements of Demat accounts properly. Open and maintain transactions through them to prevent the freezing of the Demat account.