How to protect the Demat account from fraud?

A Demat account helps an investor to carry out share trade in the stock market and manages monetary deposits (equity or debt) in a digital format easily and conveniently since it reduces the paperwork and makes record-keeping much more efficient. It has eliminated the need for midway vendors since all kinds of transactions can be done by the account holder from anywhere at any time.

With so many benefits the risk of fraud while using a Demat account is also immense. The transactions may vary from smaller amounts to large sums of money which may attract fraudsters to do any kind of ill activity to the account. So, it is of utmost importance to learn and apply the tactics, to secure the Demat account from any kind of forgery.

A Demat account holder must keep in mind certain practices which are needed to be done and avoided to secure the account from any kind of fraud.

DOs

1. 2-Step Verification: There is a 2 Step verification option in the Demat account which must be kept on to raise the security level of the account.

2. Different Demat Accounts: If a user is doing both long-term investment and short-term trading then it is highly recommended to use different Demat accounts. Keep one account for long-term investment and do short-term trading with another account(s) which will eventually safeguard a large amount of money. Splitting of accounts is also suggested to save tax.

3. Different Banking Accounts: Similar to the different Demat accounts for distinct purposes the bank account used for trading should be different from the main banking account, making the latter not prone to any online theft.

4. Always Log Out After Use: It is a general but risk-taking habit of people to keep all of their accounts “logged in” on their devices. It is necessary to keep the Demat accounts logged out from the device after use. It would cost only a few seconds to re-login but would increase the safety of the accounts.

5. Always Check The Transaction Statement: Keep a focused look at the transactional messages every time a transaction is done and thoroughly check the monthly transactional history. This practice would help to identify any discrepancy in the flow of money through the account.

6. Freeze The Account: In case a user has intended to not use the Demat account for a certain period of time then there is an option to temporarily freeze the account which can be made active when needed later. It would safeguard the account from any unauthorized activity.

7. Use TOTP Apps: Apart from the username, password, and PIN, the use of a Time-Based OTP (TOTP) app in the device further enhances the security of the Demat account.

DON’Ts

1. Do Not Share Private Details: One must keep in mind not to share the username, password, PIN, or OTP with anyone at any cost. The fraudsters generally call and ask for OTP or any other sensitive information in the guise of giving some account-related help or any appealing offer. Never fall for such things since an authorized person would never ask for OTPs or other sensitive details. Whenever there is a sense of hurriedness in any case there is a high chance of that being a fraud. The hackers may ask for these confidential pieces of information to enter and rob the account.

2. Do Not Open Untrusted Links: The hackers may send a link through Email or any social media platform. The link can be of any attractive advertisement, a movie download, etc, and will intensify the urge to do clickbait. Never open any such link because there is a high risk of sharing your sensitive data with the hackers on the other end waiting for easy targets to attack and steal from them.

3. Do not use Rediffmail: A Rediffmail account must not be linked with the Demat account since it has fewer security features than other Email service providers. It has been observed that in the majority of the hacking cases the Demat account is linked with a Rediffmail account. So in place of Rediffmail, any other email account is recommended.

4. Do Not Keep Unattended Cash In Trading Account: Keep only that much amount of money that is needed, in the account used for trading purposes. For example, if you do trade in less than 25 thousand then there is no need of keeping higher amounts in that account. Whenever there is a profit, transfer the extra money to another account, which is comparatively safer. Do not use the trading account for saving purposes. In case any mishappening occurs and the trading account is compromised, then that would not be holding a large amount of money to be robbed, keeping the major portion of your money safe.

Conclusion

How to protect the Demat account from fraud?

A Demat account helps an investor to carry out share trade in the stock market and manages monetary deposits (equity or debt) in a digital format easily and conveniently since it reduces the paperwork and makes record-keeping much more efficient. It has eliminated the need for midway vendors since all kinds of transactions can be done by the account holder from anywhere at any time.
With so many benefits the risk of fraud while using a Demat account is also immense. The transactions may vary from smaller amounts to large sums of money which may attract fraudsters to do any kind of ill activity to the account. So, it is of utmost importance to learn and apply the tactics, to secure the Demat account from any kind of forgery.

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