How to Safeguard Your Demat Account

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A Demat account is a key component of investing in securities markets. In this article, we discuss some easy and actionable measures through which you can secure your Demat account against various risks and potential fraudulent uses. We will also explore ways to protect your investments through a Demat account.

Steps to consider to secure your DEMAT account

A functional Demat account is an essential element of participating in the securities market in India. The securities you purchase in the market are stored safely in your Demat account in an electronic format, and you can easily access them when required. Over the years, the process of opening a Demat account has become simple and cost-effective. You can open a Demat account online and, in conjunction with a trading account, start your investment journey in the securities market. With the increasing incidence of fraud; however, it is crucial to secure your Demat account and your investment therein. In this article, we shall discuss the following:

  • How to Secure Your Demat Account
  • How to Secure Your Investment Made Through a Demat Account
  • How to Select a Demat Account

Ways on How to Secure Your Demat Account

Because there is no dearth of authorised depository participants (DPs) offering Demat accounts, it can be difficult to choose one. You must select a DP to open your Demat account after conducting substantial research. It is prudent to choose a DP with a high credibility in the securities market. Once you have opened your Demat account, you can take some easy ways to secure the account. Here are some important ways to secure your Demat account:

  • Never share your Demat account login credentials: The easiest way to secure your Demat account is to set a strong and distinct password for the account. Moreover, you must never share the login credentials for the account with anyone because doing so could make your account vulnerable to fraudulent access and use.
  • Regularly check your Demat account: It is critical to log in to your Demat account periodically and check the holding statement and activity statements. If you detect any fraudulent or unauthorised activity in the statement, you must contact the relevant depository participant immediately and block the account until the discrepancy is investigated.
  • Be mindful of the Demat account charges: Although several depository participants offer free Demat accounts, checking the entire schedule of fees associated with a Demat account is advisable before proceeding with account opening. In this way, you can prevent any sudden and unexpected shocks to keep your Demat account active.
  • Choose a Demat account with all modern-day features and security: Another key to securing your Demat account is to select a Demat account platform that comprises all or most of the functionalities prevalent in modern-day Demat accounts. Furthermore, you must also ensure that the selected DP platform has sufficient security features to prevent any unauthorised access to your account.

How to Secure Your Investment Held in a Demat Account

Your Demat account is a safe reservoir of assets you have purchased in the securities market. Not only can you safely store share certificates in your Demat account, but you can also store mutual fund units, bond certificates, and several other securities in a Demat form without worrying about damage, theft, misplacement, or storage costs. Since your Demat account is a pivotal facet of your investment journey, it is important to protect it. By doing so, you can automatically secure your investments in the account. Here are some measures that can be taken to secure your investments in a Demat account.

  • Use safe browsing to access your Demat account: Because your Demat account is the safe vault for your investments, you must access it using only the relevant depository participant's official trading platform (website or mobile application). Furthermore, you must use a safe browser to access your Demat account, and enable additional security features, such as two-factor authentication, to increase the security of your account.
  • Access and check your investment portfolio: To ensure that your Demat account is functioning properly and without any unauthorised access, you must log in to the account regularly and check your investment portfolio. You must also check the Demat account statements shared by the DP and identify and report any discrepancies.
  • Do not let your Demat account become dormant: Inactivity in your Demat account throughout 12 months may lead the DP to classify the account as dormant. Therefore, it is important to access your account now and then (even if you are not actively trading) to keep the account active and check that it is operating as it should.
  • Make informed investment decisions: Modern-day Demat account platforms comprise a host of information about the market, including reports, patterns, and trend analysis. While it may be tempting to follow the trends and make investments in line with them, it is important to conduct your research and be mindful of your investment goals, timeline, and risk appetite before making any investment decisions.
  • Refrain from leaving an unused balance in the linked trading account: Another key measure to secure your investments held in a Demat account online is to not leave any idle balance in the linked trading account. If there is any unused balance in your trading account, you must transfer it to your bank account (unless you are planning to use it for investing in the near future).

Key Criteria for Selecting a Demat Account

You must select your Demat account after carefully assessing and comparing various options. There are two ways to approach this process: you can either conduct due diligence and select a depository participant to open a Demat account with or you can visit the official website of the National Securities Depository Limited or Central Depository Services Limited and select an authorised DP from there. Before you select a DP, you must consider the following criteria, including the following:

  • Credibility of the depository participant: One of the most important considerations while opening a Demat account is the credibility of the selected depository participant. You must ensure that you opt for a DP with a strong history and credibility in the market.
  • Cost associated with the account: There are several charges associated with a Demat account, including account opening charges and Annual Maintenance Charges (AMC); thus, you must compare various Demat account offerings and select the one most suitable to your budget.
  • Efficiency of the DP’s platform: While assessing depository participants’ ability to open a Demat account with, you must research the functionality of their trading platform. It is advisable to choose a DP that offers a multifunctional platform.

To Sum It Up

By following some simple tips, you can easily secure your Demat account and ensure its smooth functioning. You must always check your Demat account statements and all correspondence received from your depository participant and take the required action in case of any discrepancy in the statement or unauthorised access to the Demat account. Furthermore, you must never share your Demat account login information with anyone. We hope this guide on how to secure your Demat account will be useful to you.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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