Your demat account is as important as your bank account. Considering the fact that it contains all of the shares, bonds, mutual fund units, and other financial securities that you’ve bought, it is extremely crucial to ensure that it remains secure. If you’re wondering how to avoid losses and keep your demat account safe, then this article is for you. Here are a few tips that you can do to prevent losses in your demat account.
1. Ensure that the securities get credited to your account on time
This is one of the simplest ways to avoid losses. Many individuals think that since online demat accounts are robust enough to automatically credit securities, nothing can ever go wrong. While that is true to a large extent, sometimes, things can go wrong and as a result, your demat account may not receive the shares or other securities that you’ve bought.
However, all that you need to do to prevent such a thing from happening is simply log into your demat account and ensure that the securities that you bought are appropriately credited or debited. In the case of shares, check your demat account after T+2 days to see if you’ve received them.
2. Never entrust signed DIS with your stock broker
Also known as a Delivery Instruction Slip, a DIS is a very important document. It allows you to transfer the securities from your demat account to another. Sometimes, few traders, for the purpose of convenience and to enable quick share transfers, entrust their stock brokers with pre-signed DIS leaves.
Such a move is highly risky since the signed DIS leaves can be misused to enact share transfers without your knowledge or approval, ending up causing losses in your demat account. Imagine a bank cheque leaf. You wouldn’t entrust a signed cheque leaf with anyone else now, would you? A DIS is very similar to that and so has to be kept with you at all times.
3. Don’t leave your demat account unmonitored for a long time
Some traders tend to leave their demat account idle for a long period of time for a variety of reasons. Again, this is also something that’s not advisable. No matter what your reason for leaving your demat account idle may be, always ensure that you bring it to the notice of your depository participant (DP). Your DP will then freeze your account.
Freezing a demat account basically prevents all sorts of security transfers out of your account (debit transactions). However, all credit transactions such as bonus share issue, stock dividends, stock splits will continue to be unhindered.
4. Keep your details updated at all times
In recent times, with online demat accounts, almost all kinds of authentications and transfers are done with the help of your registered mobile number or your registered email ID. And so, if you ever change your mobile number or your email ID, always ensure to update the same with your DP. This will help prevent others taking undue advantage of your demat account.
Hope you’re now aware of how to avoid losses in your demat account. If you don’t already have an online broking account or an online demat account, visit our website right away. With Motilal Oswal, you can open a demat and trading account online within minutes.
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