TL;DR: Correct PAN first. If your broker rejects a demat name correction, transfer holdings (CDSL) to another broker, fix the name, then transfer back. Expect transfer fees and 10–14 day turnaround for transfers.
Brokers fetch account-holder names from the PAN database; sometimes that entry differs from the name printed on the PAN card. Here’s how I corrected my wife’s name.
My wife’s last name was misspelt and was broken into three parts in the PAN database. The steps involved the correction of the name in PAN, followed by the movement of stocks to another demat account and back to Zerodha. We returned to Zerodha because of trust and a better interface.
Correction of name in PAN
PAN correction was straightforward and completed in ~2 weeks. We had to fill the forms online with the corrected name, attach proofs and send them to Protean. You may be able to e-authenticate if the name matches in Aadhaar but that was not the case with us. We only had initials in Aadhaar for the second name.
Attempt to correct name in demat account
Her account was with Zerodha and we tried submitting the account modification form and KYC, Annexure B, new PAN and address proof as outlined here. However, the request was promptly rejected as they considered it a major change and requested a gazette notification for a name change or passport to be submitted. Our attempts to make them understand that ours was a name correction and not a name change were unsuccessful. That is when I sought advice from Manmohan whom I know through the ever-helpful AIFW community. He was quick to point out that these attempts would be futile based on his multiple experiences and suggested that I move my demat account elsewhere and come back to Zerodha later if necessary. Another suggested option was to transfer the holdings to my account temporarily, close the Zerodha account and move the holdings back to a new account - this will have to be backed by documentation.