We must know how to protect our demat accounts from fraud in today’s digital age. A Demat account is exposed to a wide range of fraud and cyber threats as an electronic repository for the safe keeping of your securities. But by taking the most important steps, you can protect your demat account and reduce the risk of fraud.
Individuals open a demat account, to store shares and other assets. Customers can make transactions more easily while shopping online thanks to purchasing and storing shares in a Demat account. The Demat account combines all a person’s assets in stocks, government securities, exchange-traded funds, bonds, and mutual funds.
Over the past decade, there has been a growing number of fraud incidents on Demat accounts. Despite the ease of use, there is some risk associated with an electronic account. There has been a sharp rise in demat account frauds over recent years, partly because new investors enter the market and cannot defend themselves.
You can considerably reduce your Demat account fraud risk with some easy steps. Account holders can take several measures to protect their Demat accounts from fraud.
How To Prevent Fraud On Your Demat Account
To combat Demat Account fraud, here are a few precautions and security measures that you can take is as follows:
1 . Safeguard Your Login Information
Please keep your login information secure. The best course of action is to recall them rather than having them recorded.In addition, it is recommended that your login password be changed frequently.
2. Keep records of your account statements
Review all the reports and SMS sent to you by the depository with care, keeping your email and telephone numbers current. You should compare all transactions with your trading activity on the demat account and submit any anomalies to the depositary as soon as possible.
3. Power Of Attorney
Demat accounts may be opened in online trading accounts by PoA brokers with Power of Attorney agreements. These POAs represent a serious threat to the growing number of demat-related frauds in this country. The sale of funds may already have been made through a general purpose agreement when the new rule was introduced, but now it is impossible.
Insist on a limited-purpose Power Of Attorney (POA) when you sign a power of attorney with your broker. To sell or transfer funds or securities, a stockbroker requires the permission of an investor. Your safety will be greatly increased through this procedure. The POA may be revoked without prior notice, except for unpaid dues.
4. Always be careful and remember your Demat account.
It happens that people move abroad and forget about their Demat account at the same time. This irresponsible act puts you at risk of phishing and other scams. If you relocate and plan on using something other than the Demat account for an extended period, it is always best to request that your depositary participant’s account be frozen. It is, therefore, only possible to grant access once you request it again.
5. A Powerful Password
There is a special password that must be protected for each Demat account. You can change the password as well. Rather than a simple and clear password, select a strong one. If you want to access Demat accounts, please do not use public WiFi or any insecure network.
6. Inspections of the brokerage firm
There has been an increase in the number of brokerage firms per day due to the popularity of stock trading among the general public. However, it is essential to conduct due diligence on the firm before selecting it, including information concerning its history, track record, reputation, and market credibility.
Furthermore, verifying that the broker does not engage in exclusive trading is essential. If a company is engaged in proprietary trading, you may not open a Demat account because a conflict of interest could adversely affect your interests. Adequate brokerage firm verification is necessary to avoid the fraudulent use of Demat.
7. Secure The Debit Instruction Slip (DIS) Booklet
The Demat account’s Debit Instruction Slip (DIS) booklet is like your bank cheque book. Before sharing your shares with any Demat accounts, you must sign DIS. You must ensure that you don’t keep the signed DIS form in your broker’s office or elsewhere if fraud is to be avoided.
There can be one or more ways fraud may occur on the Demat accounts. But by taking these simple precautions, you may dramatically reduce your risk of falling victim to demat account fraud by having a defence against demat account fraud, you can significantly lower the likelihood of becoming a victim by following these easy steps. Although a Demat account is normally quite secure, it’s important to keep an eye on the safety of your money.
Conclusion
For the safe and secure opening of a demat account and to do transactions without the fear of fraud, go ahead with a trusted stock market app like Kotak Securities. Kotak Securities offers a demat account as one of its main services. It enables its customers to have shares held electronically on their Demat account.
The most popular product Kotak Securities offers is the Trinity account, a three-in-one account combining a savings account, a demat account, and a trading account. From these three accounts, the Trinity account offers a smooth way of doing business. With Kotak, you can open only a demat account or a two-in-one demat and trading account.
