Like every precious asset requires safety and security, the securities in your demat account also requires a lot of safety. Just like gold and diamonds, your securities are valuable assets and hence you must exercise great care against any fraudulent activity or unauthorised access. Although maintaining securities in a demat account is safe as compared to holding them in a physical form, but still, they are exposed to certain risks such as fraud, processing errors, unauthorised trading by forging signature, etc. So, in this article, we will tell you how to prevent unauthorised transactions in your demat account.
- Update your mobile number and email id
This is the very basic step which can prevent unauthorised transactions in your account. It is imperative to update your mobile number and email id with your depository participant or financial institution in order to get regular updates and alerts of your transactions. It helps you receive constant notifications on all the debits, credits and other transactions in your demat account directly from Central Depository Services Limited (CDSL).
- Check your transaction statements regularly
Your depository participant maintains an electronic record of your transactions and holdings in your demat account. You must ask for a transaction statement from your depository participant. It will give you details of all the debits and credits that take place in your demat account on a regular basis. Moreover, this transaction-cum-holding statement makes you the legal owner of those shares. You should regularly check the transaction statement to match the trading activities with your personal records. You may also opt for Internet-based statement facility if your depository participant offers them.
- Freeze the account
Another way of protecting your demat account is by using the freeze facility. It allows you to freeze your demat account and restrict any trading from it. Once you give a freeze instruction to the depository participant by filling up a prescribed form, none of the shares can be transferred from your account without your permission or further notice. This facility is especially very useful if you are not a regular trader or when you are going on a long holiday and don’t intend to trade.
- Get a copy of transaction statement from depository
If you are an inactive trader or investor, you are more likely to fall into the trap of unauthorised transactions. Since there is a minimum to no activity in your account, you receive a transaction statement only once in three months. This gives space to unethical depository participants to make a debit or a credit in your demat account without your notice. However, you can protect yourself from such fraudulent activities by getting a copy of your transaction statement directly from the depository. There are two depositories in India – NSDL (National Securities Depository Limited) and CDSL (Central Depository Service Limited). You can contact the depository that your depository participant is registered with. Once you raise a request for the transaction statement to the depository, you will immediately receive it and you can compare it with the one provided to you by your depository participant to identify any discrepancy.
Conclusion
The above measures will help you stay protected and will ensure that you spend your time in identifying good stocks to invest in rather than finding irregularities in your demat account and getting them corrected.
