Ever since the trading and investment in the stock market has switched to a digitalised mode of operation, the entire process of the buying, selling, and holding of securities has been transformed. Now it is mandatory for anyone wishing to participate in the country's securities market to open a demat account.
A demat account is an account which enables you to hold the securities you purchase from the securities market in a dematerialised form. You can open a free demat account with a depository participant (DP) in India but the account shall actually be held by one of the depositories functional in the country, namely the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL).
Your demat account is akin to your bank vault or locker, albeit it stores your securities in an electronic manner unlike tangible assets. By opening a demat account, you become liable to pay the demat account charges as shared by your depository participant at the time of account opening. These annual account maintenance charges are levied in exchange of the demat account services offered by the DP throughout the year.
If you are wondering whether you can have multiple demat accounts in India, then the answer is that you can. It is legally permissible for an individual to have various demat accounts in the country. However, there are certain caveats attached to having multiple demat accounts, namely:
Although you are legally allowed to have multiple demat accounts in India, you must only opt for that route if it is required. As is the case with everything in life, having various demat accounts carry certain pros and cons which have been listed below.
1. The pros of having multiple demat accounts: Here are the main pros of opening multiple demat accounts.
2. The cons of having multiple demat accounts: Having multiple demat accounts also have some cons, namely:
The laws prevailing in India have made it permissible for an individual to open and hold various demat accounts. However, you must only open several demat accounts if you require separate demat accounts for your trading and investment in the securities market.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account