Can I Have Multiple Demat Accounts in India?
In FY 2022, there was a 63% jump in the total number of active Demat accounts in India, highlighting the growing interest of retail investors in the stock market. While many investors are opening their first Demat account, a vast majority prefers to open multiple Demat accounts. This might come as a surprise to many but legally you can open multiple Demat accounts. However, before we discuss the implications of opening multiple Demat accounts, let us understand why you might need multiple Demat accounts in the first place.
Why you might need more than one Demat account
- If you are both, a trader, and an investor, then having multiple Demat accounts can help you keep profits and data of both activities separate.
- If you have short-term as well as long-term financial goals like a child's education or buying a new car, then multiple accounts can be used to maintain separate portfolios.
- Investors also prefer keeping their assets separate. So, they maintain separate Demat accounts for equities, debt, and commodities.
Benefits of Multiple Demat Accounts
Opening multiple Demat accounts in India has the following advantages:
Better Management- With separate portfolios maintained across different accounts, you can easily buy and sell shares held with different brokers without any confusion.
Detach Trading with Investing :- Separate Demat accounts allow you to keep your trading and long-term investing activities segregated, from both taxation and tracking perspective.
Comparative Research/Analysis- Using the research reports of various brokers provide you with insights that help you in healthier comparison and better investment decisions.
Implications of Opening Multiple Demat Accounts
As per regulations laid down by stock market regulator SEBI, it is legal to own more than one Demat account. So, while you can open multiple Demat accounts, you need to consider the following factors:
● Dormancy- For a Demat account to remain active, you need to perform some activity. For instance, if you buy shares using a particular Demat account, it is considered active even if you hold the shares and never sell them. However, if you never trade or invest using a Demat account, it is considered dormant and is deactivated by the broker. Hence, you must ensure that all the accounts remain active.
● Maintenance Cost- Typically, an annual maintenance charge (AMC) is levied by the broker for keeping your Demat account active. So, if you are opening multiple Demat accounts, you must consider this additional cost that you may have to incur. However, with m.Stock, you only have to pay AMC once and then trade for free across products for life, without brokerage or AMC.
● Security- Under rare circumstances, if any broker decides to discontinue providing services, then having multiple accounts can come in handy. In such cases, you will simply have to transfer the shares from one Demat account to another.
[Read More: How to transfer shares from one Demat account to another]
Before you proceed to open multiple Demat accounts, just keep in mind that you cannot open more than one Demat account in your name with the same Depository Participant (DP). This simply means that if you have a Demat account with XYZ broker, then you can open the second Demat account with m.Stock, but not with the same broker again. However, you can open Demat account with the same broker, in joint ownership with another family member like a spouse, daughter, son, mother, or father.
Opening a Demat account with m.Stock
Follow the below mentioned steps to open a Demat account with m.Stock in less than 5 minutes:
- Step 1: Enter your mobile number and OTP
- Step 2: Complete the KYC process and verify your details like PAN, Date of Birth etc.
- Step 3: Upload the required KYC documents
- Step 4: Add bank account details
- Step 5: e-sign your documents and that's it!
The login credentials will be sent to your email ID within 24 hours, using which you can login and start trading.
If you are an active trader and investor, then having two separate accounts is recommended. But it is crucial that you choose a good broker, which can help you save brokerages. This is where m.Stock’s Zero Brokerage account can prove to be a game changer. With zero brokerage across products for life, and a superfast, reliable trading platform, m.Stock by Mirae Asset is your ideal trading partner. Open a zero brokerage account with m.Stock today and trade free for life.