Nowadays, the Demat account opening procedure is completely digital and takes a matter of a few minutes. You can invest in a number of financial instruments with just a few clicks by using this electronic account. However, decrypting technology is as easy as developing it. Therefore, such convenient electronic accounts also carry certain risks. To ensure the security of your investments, you need to know and follow all the precautionary measures.
Several cases have come to light in the past years where investors’ shareholdings were used without their consent. However, SEBI (Securities and Exchange Board of India) has taken cautionary steps and reviewed its PoA (Power of Attorney) norms in the interest of investors. On your end, while choosing the best demat account, you should look at high-end technical support besides the convenient demat account opening procedure.
With a few basic but essential checks, you can ensure the security of your assets in the stock market:
1. Updated Contact Number and Email ID
Make sure your mobile number and email ID are updated and active to receive messages from central depositories NSDL/CDSL for every debit to your demat account. It will help you to have a proper track of your trades.
2. Secure the Debit Instructions Slips.
Never leave a signed Delivery Instruction Slip with your broker. It is like getting into a fraudulent activity on its own.
3. Avoid Idle Securities
If you are not involved in marginal trading, do not let lie share in your broker pool account. You can get it transferred into your demat account.
4. Limited Scope for Power of Attorney
PoAs have been a significant threat to the increasing demat related frauds. Therefore, you should discuss and have transparency regarding the details of the PoA agreement. In the event of assigning power of attorney, read the fine print carefully. Even if you have the best demat account with the world’s best broker, mention the specific conditions under which your broker can use the attorney. As per the revised SEBI regulations, you have the right to limit the purposes of PoA.
5. Strong Login Credentials
You should protect your accounts with strong usernames and passwords. It is better to change them frequently. It would be best not to note them down anywhere. Just remember them.
6. Opt for Online Transfers over Offline
You can opt for online services “Speed-e or Easiest” to transfer shares instead of providing power of attorney to your broker.
7. Secured Connection
Use a secured connection to operate your online trading account instead of using public wi-fi or cybercafe.
8. Low Balance in Savings Account
You need to link your bank savings account with your trading account. Avoid linking your primary savings account to link with your trading account. You can use another account with a limited balance.
9. Account Freezing Facility
Every broker provides an account freezing facility. If you want to take a break from trading for a longer period, better to freeze your trading account and get any funds/securities into your bank/demat account from the broker’s pool account.
You need to give a signed instruction to your broker to freeze your demat account. In a freeze demat account, there will be no debit transactions until you unfreeze it. You should note that only debit transactions will be blocked and not credits. Dividends, bonuses, and right shares can be credited to your frozen account.
10. Maintain a Record
Maintain a record of your demat holdings and transaction statements. It will help you to spot discrepancies if any. Brokers provide the demat account statement periodically. You should consider evaluating the statements thoroughly to ensure that all the recorded transactions are made by you.
This way, you can take advantage of a quick and convenient Demat account opening procedure, and basic cautious activities can protect your trading and demat account.
Also read- Reasons to Use a Stock Market News Service