Do you want to invest in the stock market? You must know all about the Demat account. This is your ticket to the world of trading. It is impossible to participate in trading activities without this account.
But even a Demat account doesn’t always guarantee the safety of your shares in the age of the internet. So, you should know how to protect your shares from unforeseen events like identity theft, cybercrime, and online scams.
What is a Demat account?
This an account that you use to hold shares and securities in the electronic format. It makes trading convenient as well as safe. Earlier, shares were held in the physical format and exposed to different threats. But these possibilities have been wiped out with the introduction of the Demat account.
Nevertheless, you must stay alert and monitor your Demat account for any unauthorized transactions.
Why you should safeguard your securities
While trading with a Demat account, you avoid the hassles associated with physical securities. You can open a Demat account with a depository participant (DP) that makes entries on your behalf. However, risks like processing errors and banking frauds cannot be avoided.
Who else can trade using my Demat account?
Anyone who has access to your Demat account can trade shares with your forged signature. However, every transaction leaves a statement behind. This statement contains trading details and it can be used to track down the fraudster.
Are you wondering how to prevent unauthorized transactions in Demat account?
Here are some quick tips:
1. Keep your contact details updated
Always update your mobile and email id with the DP. This will help you get notifications and alerts in case of any transaction in your account. You will also get information about your trading activities on your mobile and email at the end of the day. In case of any unexpected activity, inform your DP immediately.
2. Subscribe to transaction statement
Just like your bank passbook, a transaction statement gives you a detailed account of your share outflows and inflows. This statement allows you to verify your trading activities with your personal records. Moreover, it can be served as a legal document to prove your shareholdings with the DP. For subscription, you need to contact your DP.
3. Get in touch with your DP
Irregular investors sometimes become victims of fraud. As inactive account holders get quarterly statements, they are more vulnerable to malpractices. Also, there are cases where DPs have debited and credited the same shares to meet a temporary need. You can double-check your DP’s transaction statement with the one from the National Securities Depository Limited or Central Depository Services Ltd.
The final call: Freezing your Demat account
Have you been observing unusual activities in your Demat account? Consider freezing the account for a while. By doing so, you can block share trading via your Demat account. For this, you may need to submit a formal request to the DP. You can freeze either the entire account or just a specific stock.
The steps mentioned above will add an extra layer of security to your Demat account. Always make sure not jeopardize your account credentials. Taking too many precautions can never be a bad thing when it comes to your hard-earned money.