Course Detail

Course Description

The securities market in India is renowned as much for its diversity as for its stringent regulatory framework and emphasis on transparency and investor security. With concerted efforts to make the market accessible to all categories of investors, particularly first-time retail investors, various processes in the operational mechanism of the market have been streamlined. For instance, the process of opening demat and trading accounts online has become more accessible than ever before. However, technology does have a flip side, and online accounts have their own share of potential risks. In this article, we shall discuss some measures you can take to effectively manage your demat account. 

What is a demat account 

Before delving into ways to safeguard your demat account, let us briefly discuss what is a demat account. When you purchase securities in the market through a trading account, the securities are credited to the linked demat account is. You can think of a demat account as a securities market equivalent of a bank savings account. The shares, bonds, mutual funds, etc., you purchase from the market get stored in a paperless form in your demat account, and the selected depository participant charges different categories of demat account fees for the depository services.

Tips to manage your demat account 

While the primary purpose of a demat account is to securely hold your demat securities, such an account is also an excellent central point for your investment decision making. You can check the allocation of various assets in your investment portfolio and the gains (or losses) on each. At any point of time, you can determine how to recalibrate the portfolio by adding or removing certain securities. 

Since a demat account is an integral part of your investments and financial planning, you must be mindful about safeguarding it and effectively managing it; here are seven measures you can take to do so:

• Open a demat account with a credible depository participant: You must select a credible stock broker to open your demat account with. In addition to perusing the features of the demat account, you must also check the demat account fees, including account opening charges, Annual Maintenance Charges, transaction charges, and custodian charges. 

• Access your demat account on the official trading platform of the broker: Once you have opened a demat account with the required functionalities and feasible demat account fees, you must access the account only through the official website or mobile application of the stock broker/ depository participant. Furthermore, you must set a strong password for your demat account, turn alerts on, and enable Two-factor authentication. 

• Never share your demat account information with anyone: Just as you must keep your bank account details confidential, you must protect your demat account credentials. The mistake of sharing such information with anyone could leave your account susceptible to unauthorised access. 

• Carefully check your demat account holding and transaction statements: Your depository participant is mandated to share your demat account statements on a periodic basis (weekly, monthly, etc.). You must check such statements, analyse each transaction, and identify any instance of unauthorised activity. If there is any discrepancy in the statement, you must inform your DP about it. 

• Pay your demat account fees on time: Another important facet of managing your demat account is paying your demat account fees on a timely basis. Your DP shall intimate you when different types of demat account fees become due, and how to pay them. 

• Freeze your demat account during prolonged inactivity: Demat accounts with no activity for a 12 month period can be categorised as dormant. In prevent your demat account from becoming dormant, you must use it at least once in a year. If you do not wish to use your demat account for an extended time period, you can either freeze it or (if required) close it. 

• Inform your depository participant about changes in correspondence details: If there is a change in your email address and mobile number registered with the depository participant, you must inform them or the change and update your demat account. This way, you shall not miss any significant communication pertaining to the account. 

The bottomline 

It is easy to safeguard your demat account. All you have to do is not share account information with anyone, regularly access the account, be wary of suspicious emails and messages, and use safe browsing and official platforms to access the account. By following some or all of the measures mentioned above, you can do your bit in effectively managing and securing your demat account.