Multiple Demat Accounts: Should You Have More Than One?

You know that feeling when you walk into a store and the shelves are lined with so many tempting products, that you want to have all of them? Well, that's how the world of investing can feel sometimes. You might start with one stock portfolio, then get curious about bonds, Mutual Funds, ETFs, and the list goes on. As you dip your toes into different investment options, you might start thinking, "Can I have more than one Demat account?" The short answer is yes! 

And guess what? You're not alone! Turns out, investors have been collecting Demat accounts like they're limited-edition sneakers. Back in FY17, 61.8 lakh people had two or more Demat accounts. Now, that number has exploded to 373 lakh in FY24. That's a 504% jump! Clearly, one account just isn't cutting it anymore!

Not only is it possible to have multiple accounts, but doing so might actually help you. But before you rush to open several accounts, let's talk about the reasons why you might want to have multiple Demat accounts, whether it's legal or not, and how to make it work for you.

Table of Contents

• Is it Legal to Have Multiple Demat Accounts?
• Benefits of Opening Multiple Demat Accounts
• Rules for Opening and Managing Two or More Demat Accounts
• How to Handle Multiple Demat Accounts Efficiently?

Is it Legal to Have Multiple Demat Accounts?

We know that a Demat account is for you to store your stocks, bonds, Mutual Funds, and ETFs in digital form. Instead of holding physical share certificates (which could get lost or damaged), everything is stored electronically. 

But the big question is, "Can a person have 2 Demat accounts?" The answer is yes! There's no law stopping you from having multiple Demat accounts. In fact, many investors choose to open more than one account to:

• Organise their investments

• Manage risks better

• Avail different services by different brokers 

And it is totally legal to have more than one Demat account in India. The Securities and Exchange Board of India (SEBI), which regulates the stock market, allows individuals to open multiple Demat accounts. In fact, there were only 59.2% unique demat accounts in FY24. All you need is a PAN card. And yes, you can have 2 Demat accounts with the same PAN card. This is how most people do it. Your PAN card acts like a unique identifier, and all your Demat accounts can be linked to this one number. 

Clearly, investors are taking full advantage of this flexibility, as you can see in the table below:

Number of Demat accounts	FY17 (in lakh)	FY24 (in lakh)	Growth
1	161	523	~3.25x
2	42	207	~4.9x
3	13	88	~6.9x
More than 3	7	79	~11.3x

However, while you can have multiple Demat accounts, the total value of your investments across these accounts will be considered when you file your taxes. So, if you want separate Demat accounts for your long-term investments and short-term trades, you can go ahead; you won't get into trouble for that. Just keep track of what's in each account.

Benefits of Opening Multiple Demat Accounts

Now that we know you can have multiple Demat accounts let's look at why someone might want to open more than one.

1. To keep things organised

Imagine you have a big box full of mixed-up stuff: books, clothes, papers, and gadgets. It would be so hard to find anything, right? The same goes for your investments. Having multiple Demat accounts can help you keep things organised.

For example, you could keep stocks in one account and Mutual Funds and bonds in another. Maybe you want one account for trading and another for long-term investments. This way, it's easy to track your investments and manage them separately.

2. To keep personal and business investments separate 

If you run a business and invest in the stock market, you might want to keep them separate. By opening multiple Demat accounts for personal and business investments, you can avoid confusion. It also makes it easier to keep track of what's happening in each area and manage tax filings better.

3. To reduce risks 

Imagine you keep all your eggs in one basket. If that basket falls, all your eggs are broken! The same can happen with your investments. If you keep everything in one Demat account, you risk everything being affected by issues like fraud, technical problems, or account freezes.

But if you spread your investments across multiple Demat accounts, even if something goes wrong with one, your other investments stay safe. So, it's a good way to reduce risk.

4. To use services from different brokers

Not all brokers are the same. Some might offer lower trading fees, others might have better customer service, and some might give you access to research reports. 

For example, brokerage houses generally publish research reports and offer free stock or Mutual Fund recommendations for their registered customers. When you have multiple Demat accounts, you can access recommendations or research reports from multiple brokers. By having multiple Demat accounts, you can take advantage of what each broker offers. 

But what about the "red tape" of it all?

Rules for Opening and Managing Two or More Demat Accounts

Now that you're excited about having multiple Demat accounts, it's important to be aware of the rules and guidelines to ensure you're on the right track. 

1. Opening process: 

• To open a Demat account, you need to submit your KYC documents, such as your identity proof, address proof, and PAN card. 

• You'll have to fill out a separate application for each Demat account with your chosen broker. 

• Just remember to follow the broker's rules and be honest about any Demat accounts you might already have.

2. Same PAN card

The great news is that you can link multiple Demat accounts to the same PAN card. This makes managing your investments easier, especially if you want to keep everything organised in one place. Just keep in mind that you'll need to list all your Demat accounts to avoid any confusion or issues with tax authorities.

The same is true for mobile numbers and bank accounts. You can open multiple Demat accounts with the same mobile number. The number is just used for communication and verification, so it won't stop you from opening more than one account. 

You can also link multiple Demat accounts to one bank account. This is totally fine, as the bank account will only be used for settling transactions. Just be sure to manage your funds properly since all transactions will be tied to that one account.

Opening more than one Demat account can offer you flexibility, but it comes with certain responsibilities. So, before you open that second (or third) Demat account, here are some essential rules to keep in mind:

1. Different brokers for different accounts:

If you're planning on having multiple Demat accounts, you must open them with different brokers to keep things compliant with SEBI regulations. However, it is possible to open multiple Demat accounts with the same broker if the account holders are different. 

2. Annual Maintenance Fees (AMC):

Each Demat account will attract AMC. Yes, you heard that right! Even if you don't use the account regularly, you'll still have to pay the AMC for each account. If you're planning on opening several accounts, you need to be prepared for these additional charges.

It seems easy to open multiple Demat accounts, but how to manage your accounts once they're open?

Managing multiple Demat accounts can be tricky, but a structured approach can make it easier. Here's a quick checklist to keep everything in order:

How to Handle Multiple Demat Accounts Efficiently?

Managing multiple Demat accounts can be tricky, but with a little planning, it gets easier! Here's what you can do:

1. Keep things neat! Use one account for long-term investments like shares and Mutual Funds and another for trading. This way, it'll be easier to keep track of your multiple Demat accounts.

2. Every account comes with maintenance charges (AMC). If you don't use an account often, go for one with low or no AMC. For active trading, pick a broker with low transaction fees to save money.

3. Make a habit of recording your trades. Note what you buy, sell, and when. Also, check your account statements regularly to avoid mistakes.

4. Use price alerts so you don't miss a good deal. You can also use apps to see all your Demat accounts in one place.

5. Keep an eye on announcements like dividends, bonuses, or rights shares. Don't miss out on information that'll help you make better investment decisions.

6. Ideally, if an account is just existing, you should think about closing it. But first, transfer your holdings to another active account.

7. Keep a simple record of all your profits and losses. It'll save you a lot of stress during tax season.

Managing multiple Demat accounts isn't hard. You can do it efficiently; all you need are some planning skills. 

Conclusion

So, can you have multiple Demat accounts? Absolutely! And it is something you might want to consider. If you want to keep your long-term investments separate from your trading activities or explore the different services offered by various brokers, multiple Demat accounts offer you the flexibility to do so. 

And if you're stuck on choosing the right brokers, Finology Select makes it super simple for you. With over 20 top brokers to compare based on fees, services, and features, you can find the best fit for your investment needs. 

But always remember that having multiple Demat accounts is not like having multiple chocolates. They come with significant price tags, and not managing them efficiently can have negative effects. So, open more than one Demat account only if you need to.

FAQs

1. Can I open more than one Demat account?
   Yes, you can open multiple Demat accounts with different brokers. If you're unsure which broker to choose, Finology Select can help. Compare over 25 top brokers based on fees, services, and features, and pick the one that best suits your needs.

2. Can I have one Demat account and multiple trading accounts?
   Absolutely! A Demat account is like your storage locker for stocks, while trading accounts are the tools you use to buy and sell stocks. You can link multiple trading accounts to a single Demat account for added flexibility. 

3. Can I hold two Demat accounts?
   Yes, you can hold two (or even more) Demat accounts. And if you're confused about which broker to choose for your additional Demat account, Finology Select offers a side-by-side comparison of top brokers, making your decision easier. 

4. Can a person have multiple Demat accounts?
   Yes, any individual can open multiple Demat accounts linked to the same PAN card. To ensure you pick brokers that align with your investment goals, evaluate different brokers based on charges, customer service, and special features.