Investors in the Indian stock market are relishing the benefits of online Demat account for years now. All the worries related to theft, loss, or damage of shares and securities certificates were drained out with the rise of these accounts. Such an account not only helps in securing the shareholdings electronically but also offers a seamless transfer of funds. If you already have a Demat account, you must be aware of its uses and functions. However, what should be more of a point of concern for you is how to protect it from online frauds in the country.
It is no secret that decrypting technology is as easy as creating it. There are several cases registered in the past of investors losing a part of their shareholdings without their consent. In the worst cases, some lost their entire holdings to a third party account which could not be tracked. For ensuring that the same does not happen to you, it becomes crucial that you choose the right DP and take all the precautionary measures to protect your account. For high-end technical support and safety open an account with IIFL (Indian Infoline) and take the burden off your shoulders!
Ways To Protect Online Demat Account
The most vital part in the protection of an online Demat Account is played by the Depository Participants who work as intermediaries between investors and the two major depositories, NSDL (National Securities Depository Limited) and the CDSL (Central Depository Services Limited). So, your primary point of concern must be choosing a reliable service partner. Apart from that, there are a few tips that you should use for maintaining a safety measure.
1. Protect Your Login Details
Your online Demat account username and password are as personal as your social media handles. Under no circumstances, you should share the login details with your colleagues, friends, or even the representatives of the Depository Participant. The convenience of access to the accounts can be misused anytime without you realizing the consequences of the same. So, protect your details and avoid noting it on your mobile or laptop’s unsecured folders.
2. Keep A Track of Your Account Statement
Some DPs (Depository Participants) provide the online Demat account Statement quarterly or monthly while a few may also offer weekly service. In any case, you must evaluate the statements thoroughly to make sure all the enlisted transactions are made by you. Some people get so invested in the trading activities that they neglect the account statements until it is too late. You should not ride a blind horse and do such a mistake.
3. Secure The DIS Booklet
The DIS (Debit Instruction Slip) of your online Demat Account is equivalent to the checkbook of your savings account. With the rise of mobile applications for transacting the Demat accounts, use of DIS has reduced significantly. Some investors do not even bother to collect this booklet from their DP. This would be one of the biggest mistakes you can commit as if your signature is forged somehow, it will not be difficult to debit your Demat Account.
4. Low Balance In Your Savings Account
The savings account that you have linked with your trading and online Demat Account must not hold a huge amount of money. It is a well-known fact that for smooth transactions, you need to link your savings account with the other two. If you link your primary savings account that holds all your wealth, it might get you in trouble. So, use another account and keep only sufficient balance for a one-time transaction.
5. Freeze The Account During Inactivity Period
Although every DP provides the account freezing facility, investors often tend to forget that it exists! If you are not into regular trading in the share market or mutual funds, you must freeze your online Demat Account immediately for the period of inactivity. So, whether you are going on a vacation or a company trip, freezing the Demat Account must be on your to-do-list.
Intervention From The SEBI
After the cases of online Demat Account fraud hiked a few years back, the SEBI (Securities and Exchange Board of India) intervened to standardize the norms of the PoA (Power of Attorney) document. The DPs take the signature on this document during the time of account opening to seek permission for debiting the account every time a share certificate is sold. As per the revised regulations, you can now avail a limited purpose PoA limiting your DPs rights to debit the account. So, you must discuss the details of this PoA agreement very clearly with your DP to reach a level of equal transparency.
Online Demat Account fraud cases will more or less always be there in one form or the other so they can only be avoided and not eliminated. Thus, you have to take charge of protecting your account with the help of the best Depository Participant who can promise the safety measures you seek.
