Can You Open More Than One Demat account ? Rules, Benefits and How to Track Them All

Can you have multiple Demat accounts in India?

Yes, an individual can have more than one Demat account (i.e. with different DPs). You can also open accounts with the same DP (subject to that DP's own rules and requirements).

Each account must be opened in line with the prescribed KYC process. Your PAN is used to identify you across your various securities market accounts and as such the same PAN will generally be associated with your individual Demat accounts.

For instance you could have one Demat account with Broker A and another with Broker B. You could also have separate accounts for different investment purposes.

Remember that opening multiple accounts doesn't mean you can use different identities or different PANs to get around the regulatory requirements. All the account information must be correct and must be that of the account holder.

What are the rules regarding the holding of more than one Demat account?

Before opening another account, understand these important points:

1. Complete KYC for Every Account

Each new Demat account will require the requisite account opening and KYC documentation. Depending on the DP and the rules in force, some of the information may be pulled from existing KYC records but further steps may still be necessary.

2. Use Your Own PAN

Your PAN is a key identifier for all transactions in the securities market. It is absolutely essential that the PAN and your personal details submitted in relation to every account are correct and match exactly with your official records.

3. Understand BSDA Eligibility

A Basic Services Demat Account (BSDA) will have lower maintenance charges for eligible individual investors. Eligibility is however subject to certain conditions (i.e. number of Demat accounts held and value of securities).

If you have more than one Demat account you may not be eligible for the BSDA benefits. Always check the most recent SEBI framework and your DP's instructions before you assume that a second account will be entitled to the reduced AMC.

4. Review Each Account’s Charges

Every account will have its own Annual Maintenance Charges (AMC), transaction charges and service charges. Opening a further account could therefore lead to an increase in your total account maintenance costs.

5. Keep Your Contact Details Updated

Make sure your registered mobile number, email address and other KYC details are up to date. This will ensure that you receive your account alerts, statements and any verification requests.

Benefits of Having More Than One Demat Account

Multiple Demat accounts can be of use in the right circumstances.

1. Separate Long-Term Investments from Active Trading

You might prefer to keep your long term shareholdings in one account and use a different account for your more frequent trading. That way your investment holdings can be reviewed separately from your trading activity.

2. Use Different Brokers and Platforms

Different brokers will have different pricing structures, different research tools, different interfaces and different services. Having accounts with more than one broker gives you access to their respective facilities (subject to their T&Cs of course).

3. Organise Investments by Financial Goals

You could have separate accounts for different objectives (e.g. long term wealth creation and a future specific financial objective). That would give you a more structured way of tracking your portfolio. The accounts would not however be treated separately for tax purposes or in terms of investment ownership.

4. Maintain Access to Different Services

A broker may have certain features or services that another platform doesn't. You can have multiple accounts giving you access to a range of facilities, but you have to assess whether the facilities offered are worth the extra cost and the extra admin that comes with it.

What are the disadvantages of multiple Demat accounts?

Although there are a number of accounts that give you flexibility there are also associated responsibilities.

• Higher maintenance costs: You will be liable to pay AMC and other applicable charges for each account.
• More account statements: You will need to review statements and transaction records from different DPs.
• Scattered holdings: Tracking your overall investment portfolio can become difficult.
• Additional KYC management: You must keep account information updated and complete verification requests when required.
• Greater monitoring effort: You will need to track corporate actions, alerts, account activity and service-related notifications across accounts.

Opening up another account with no clear purpose in mind may just add to the complexity without really providing any benefit.

How to Track Multiple Demat Accounts

If you have more than one Demat account then having some sort of simple tracking system can be of great help.

1. Maintain a Centralised Record

Create a spreadsheet with one row for each broker or DP, containing the account identifier, account opening date, AMC and the registered contact details. Don't store any passwords, PINs or OTPs in the spreadsheet.

2. Review Consolidated Account Statements

A Consolidated Account Statement (CAS) can give you a combined view of the securities held in all your eligible accounts linked to your PAN. Both NSDL and CDSL offer consolidated statements (subject to their respective reporting and account linking procedures).

Review your CAS from time to time to get a clear picture of your overall holdings and to spot any discrepancies.

3. Check Individual Account Statements

A consolidated statement is of course useful, but it should by no means take the place of looking at the individual account statements. You need to check the transaction history, the charges, the holdings and all the other account specific information via the respective DP or broker.

4. Track Annual Charges

Keep a record of your AMC, your DP charges and all the other fees. That will help you to determine whether each account is still worthwhile and whether the account is actually costing you anything.

5. Keep All Accounts Active and Updated

Check the official notifications and ensure your contact details are up to date if they ever change. If you do decide to close your account then you must understand the closure process and follow the correct procedure for transferring any securities you may have remaining.

Should you open another Demat account?

The decision really comes down to your own investment habits and why you're opening up another account in the first place. If you need different broker services or simply want to organise your holdings then another account may be of use.

However think about the additional fees, the KYC requirements and the amount of tracking involved before you go any further. You don't need multiple Demat accounts just because you're investing in different stocks and different mutual funds.

Final point: You can in fact have more than one Demat account in India as long as each one satisfies the relevant requirements. The key is to keep proper records, be aware of the charges and keep a close eye on your overall portfolio.