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Have A Demat Account? Check These 5 Things To Avoid Losses


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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