A Demat account is an integral component of online trading in India’s share market. You can open a demat account online with any authorized depository participant. Similarly, opening a trading account in India is also a fairly straightforward endeavor.
Although the usage of demat and trading accounts has made online trading in the share market easier and relatively more transparent, there are several risks that such accounts are susceptible to.
In this article, we will discuss eight effective ways to keep your demat account safe from misuse or fraudulent access.
Ways To Keep Your Demat Account Safe From Misuse & Fraud
In order to reduce time and effort, it is prudent to open a two-in-one account (trading and demat account) or a three-in-one account (bank account, trading and demat account).
You can access your online trading account in India as well as the linked demat account on the selected stock broker’s trading platform. While logging in to the selected trading platform, you must use a safe Internet browser and a trusted device.
Here Are Some Actionable Ways To Protect Your Demat Account Against Misuse.
Open A Demat Account With A Credible Depository Participant
The first point you must keep in mind with regard to your demat account is the selection of a credible depository participant. In order to ensure that you opt for a trustworthy DP, you must carry out some research. You can also visit the official portals of the NSDL or the CDSL to see the list of authorized DPs in India.
Set A Strong Password For Your Demat Account
Once your demat account has been opened, you must change the default password and set a strong and unique password. It is critical to remember that this password is the key to your demat account access, which is why it should be something that you can remember but not something that can be easily guessed.
Always Keep Correspondence Details Updated
Another thing you must remember is to always update your correspondence address with your selected DP and stockbroker. These details include your email address, contact number, and correspondence/ permanent address.
Regularly Check Your Demat Account
Keep tabs on your demat account on a periodical basis, say a week or a fortnight (or every day or alternate day if you are involved in a high volume of trades). By regularly checking your demat account holding statement and transaction statement, you can be well-placed to detect any discrepancies or unauthorized activities.
Refrain From Sharing The Log In Details Of Your Demat Account
Just as the information pertaining to your bank account is confidential and sensitive, the information associated with your demat and trading account is, too. In order to prevent any unauthorized access to your demat account, you must never share the login credentials with anyone.
Avoid Keeping Unused Balance In The Linked Trading Account
Sometimes, there may be some unutilized funds in your trading account linked to your demat account. Using said funds to invest in securities or transferring them back to your linked bank account is advisable. Keeping idle funds in your trading account for a long time is not advisable.
Do Not Click On Unverified Email/ Message Links
It is no secret that the incidence of online fraud is on the rise. You must always check the source of the emails and messages you receive from your selected depository participant or stockbroker. Furthermore, you must not click on any links received via email or text message without verifying the source thereof.
Inform Your DP Of Any Discrepancies In Your Demat Account
The moment you identify anything out of order in your open demat account, you must contact your DP via email and/or phone and report the discrepancy. In such a scenario, freezing your demat account without delay is critical to prevent any further misuse.
The Bottomline
Opening a trading account in India and a linked demat account is simple. However, to ensure the safe and secure use of your demat and trading accounts, you must follow the pointers discussed above and gain an understanding of the risks associated with online trading in the share market.
