Demat accounts serve as a very good source to start investment when
people enter the world of the share market. The convenience offered by these
accounts has indeed made lots of individuals adopt this method of
smooth flow of money, stocks, shares, securities, etc. For online trading,
there are two Depositories namely NSDL and CDSL. These depositories keep your
shares and other securities securely in a demat account. They do not deal
with their customers directly but assign depository participants or brokers to
handle them.
Quite often, many customers open Demat account online, buy some stocks
according to the market scenario, and forget them. Also, if there is an
on-going economic crisis, customers tend to minimize their trading activities
to stop further losses. The cases of fraudulent trading activities in the stock
market have increased over the past few years. With the increase in the number
of customers who have limited and idle portfolios, fraudulent cases have also
increased. Hackers or frauds target the accounts which have not been operative
for quite a while. Thus it becomes more necessary to keep an eye over our
accounts so that we may not fall into their trap.
How to Avoid Loss In Demat Account?
The following points give a view about how to open Demat account and manage it to keep
it safe from fraudsters:-
●
Keep all records updated
While handling Demat
accounts, it becomes very essential to keep a track record of all the account
statements. Earlier, the hard copies of all the necessary statements or
receipts were sent and had to be maintained. Nowadays, with digitalization in
all sectors, it has become to maintain the statements sent through emails. The
broker or the brokerage firms need to issue a transaction statement every half
monthly and a monthly holding statement for the customers. This periodic
assessment of the account helps to keep a check on all trading activities
including the suspicious ones too.
●
Update latest personal details
If a person changes
his or her phone number or mail id, it is important to get these details
updated with their Demat account service providers. This reduces the risk of fraud as
the customers can access all the necessary information regarding any trading
activity whether done by them or not.
●
Give limited POA to the brokers
A POA or Power of
Attorney is a written authorization given to the broker to carry out trading
activities on your behalf. This can become a big problem if the broker is a
fraudster as it gives the power to the broker to carry out all the trade-related activities even without the knowledge of the investor. It
is better to sign off a limited purpose POA which compels the brokers to seek
their permission before buying or selling shares.
●
Get the account frozen if not in use
Quite often customers
already know that in the near future they may not want to operate their Demat
accounts. In such cases, they can ask for their accounts to be frozen to avoid
any kind of unauthorized transactions. With this, any kind of debt
from the account is barred while the credits can be received but with a
standing instruction from the account holder.
●
Do not keep the excessive amount in the account
Many investors do not
realize that they have left quite a lot of money in their Demat accounts.
Keeping an unutilized amount in the account can instigate cheating and money
loss. It is better if investors keep only a minimum amount of money in their
accounts and transfer money from their savings account only when they wish to
do any transaction.
As an investor, you
should always remain vigilant and protect your accounts from suspected
activities. Better to prevent it, rather than feel sorry afterward.
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