Beyond the Basics: Is Having Multiple Demat Accounts a Smart Move for Indian Investors?

But once the basics are covered, many investors start exploring more nuanced strategies—one of which is maintaining multiple Demat accounts in India.

So, is it smart to have more than one Demat account? Can it benefit you, or does it complicate things?

Let’s decode this in detail—from regulations to strategic advantages, and the pros and cons of multiple Demat accounts.

Is It Legal to Have Multiple Demat Accounts in India?

Yes, it is completely legal. A single investor can hold different Demat accounts with multiple Depository Participants (DPs) such as Zerodha, Angel One, ICICI Direct, Groww, or HDFC Securities, as long as all the accounts are linked to the same PAN.

However, you cannot open two Demat accounts with the same broker. The idea is that while SEBI allows account flexibility, each account must be unique to the platform.

Why Do Investors Open Two or More Demat Accounts?

While one Demat account is enough for most retail investors, there are specific reasons why experienced traders and investors prefer multiple accounts. Here’s why:

1. Segregation of Strategies

Traders often prefer to separate long-term investments (like equity shares for wealth creation) from short-term trades or derivatives. Having different Demat accounts helps you manage each strategy independently, making tracking and decision-making easier.

2. Exploring Platform Benefits

No two brokers are alike. One may offer better intraday features, another may have zero brokerage on delivery, and a third may have great portfolio analytics. Instead of choosing one, investors prefer to use each platform for what it does best.

3. IPO Convenience

Though SEBI’s new rules restrict multiple applications for the same IPO under a single PAN, having more than one Demat account can still make IPO allotment tracking easier. Also, if family members have their accounts, it becomes more streamlined to apply on behalf of each.

4. Avoiding Platform Downtime

Markets move fast, and delays can be costly. If one broker’s app crashes or a technical glitch occurs, having another Demat account as backup ensures you’re not locked out of trading when it matters most.

5. Psychological Discipline

When long-term investments and daily trades are in the same account, you might be tempted to sell prematurely. Keeping them in separate accounts adds a layer of discipline by creating mental boundaries.

How Many Demat Accounts Can One Open?

There’s technically no limit to the number of Demat accounts you can open, as long as each is with a different broker and linked to your PAN.

However, just because you can open five doesn’t mean you should. It’s important to weigh the pros and cons of multiple Demat accounts before adding more to your list.

Pros and Cons of Multiple Demat Accounts

Let’s break it down:

Pros

1. Better organization of trades vs. investments.
2. Platform diversity—use the strengths of different brokers.
3. Risk management—backup if one app/server fails.
4. Custom taxation—easy to plan for LTCG and STCG reporting across separate portfolios.
5. Reduced behavioral errors—limits impulsive selling or buying.

Cons

1. Annual Maintenance Charges (AMC): Even an inactive account may attract AMC ranging from ₹250–₹999 per year.
2. Idle account penalties: If unused, accounts can be marked inactive or frozen.
3. Tax filing complexity: You’ll have to combine reports from different brokers while filing returns.
4. More paperwork: Each broker sends separate CAS (Consolidated Account Statements), contract notes, and alerts.
5. Risk of oversight: Easy to lose track of assets if you’re not disciplined.

Who Should Consider Having Multiple Demat Accounts?

Opening two Demat accounts makes sense if:

1. You’re an active trader or investor using multiple strategies.
2. You want to diversify platforms—say one for direct equity and another for smallcase or MF investing.
3. You run a business and a personal portfolio separately.
4. You frequently use different tax-saving strategies like harvesting or asset transfers.
5. You’re managing family investments and want visibility from your own login.

But if you’re a casual investor who buys a few mutual funds or stocks once a month, managing multiple accounts may feel unnecessary.

Important Points to Remember

1. KYC Requirements: Each new account requires eKYC verification—even if you’ve submitted it elsewhere.
2. Nominee Update: You must update the nominee details in each account separately.
3. Power of Attorney (PoA): Some brokers still require a PoA for stock selling. Check before signing up.
4. UCC Code: Each account will have a separate Unique Client Code for trading.

Need Help Getting Started?

If you’re looking to start fresh or open a second Demat account, most brokers now offer fully paperless onboarding. Whether you're using Aadhaar-based OTP verification or DigiLocker integration, it takes just minutes.

Here’s a helpful resource on how to apply for demat account online that simplifies the process for new investors.

Final Verdict: One or Many?

To sum it up, yes, multiple Demat accounts in India can be a strategic asset if used wisely. The trick is not in the number but in the purpose.

Use one for long-term wealth building, another for active trading, and perhaps a third for mutual fund investing or smallcases. But be mindful of the additional cost and compliance responsibility.

Like every financial decision, having multiple accounts works best when there’s a plan behind it.