Is Your Demat Account Safe from Fraud?
Learn How to Safeguard Against Demat Account Fraud
Ever
since the concept of demat account has been introduced by the Securities and
Exchange Board of India (SEBI), it has been a game changer in stock trading.
Dematerialised trading eliminated the risk of bad delivery, fake share
certificates, delays, thefts and counterparty risk.
While
demat account is definitely efficient, faster and hassle-free, no system is
foolproof. Despite all efforts to strengthen the system, the number of
fraudulent demat account incidences have increased in the last decade.
While
more and more investors are being attracted to the stock market, most novice
investors do not know how to protect themselves.
If you
are among the investors who do not know what precautions to take to prevent
demat account fraud, this article is for you. We have listed below a few easy
steps that can help you substantially reduce the risk of a demat account fraud.
Ways to Protect your Demat Account from
Fraud
· Safeguard
your login details
It is
crucial to keep your login information secure. It is advisable to keep a strong
password or keep a biometric password. Try to remember the password and not
write it anywhere to avoid the risk of unauthorised access. Furthermore, it is
wise to change your login password at regular intervals.
· Freeze
your Demat account when not in use
If you
are travelling abroad or you know that you are not going to use your demat
account for a while, it is recommended that you give a signed application to
your depository participant to freeze your demat account in order to prevent
the risk of phishing or scams.
Note:
Even when you freeze your demat account, you continue to receive corporate
actions like dividends, bonuses and splits.
· Keep
track of your account statements
Just
like you have a passbook for your bank account, you have DP holding and
transaction statement for your demat account. A holding statement is a
summary of all the shareholdings held in your Demat account on a particular
date. A transaction statement is a summary of all the share credits and
debits that take place in your demat account on a particular date.
Ensure
that you keep your email id and phone number updated at all times and carefully
review all the statements sent over email and SMS sent by the depository
participant. It is a good practice to regularly match all the transactions in
your demat account to your trading activity and if there is any discrepancy,
immediately report it to the depository participant.
· Secure
your Debit Instruction Slip (DIS) booklet
The
DIS booklet for your demat account is equivalent to your bank cheque book. You
are required to sign the DIS before transferring your shares from one demat
account to another. Therefore, it is important to safeguard your Debit Instructions Slips at all times. Make
sure that you do not leave your signed DIS booklet with your broker
or anywhere else.
· Power
of Attorney
If you
are giving power of attorney to your broker, make sure you give a limited
purpose power of attorney which will require your broker to take your
permission before selling or transferring funds or securities from your demat
account. In fact, you can anytime revoke the power of attorney without any
notice except in the case of outstanding dues.
Conclusion
As the
saying goes, “eternal vigilance is your best defence”, being vigilant and
taking care of these small things can go a long way in improving your safety
quotient. Protect your demat account by implementing these tips and safeguard
yourself from demat account fraud.
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