Demat account fraud

How to Protect yourself from Demat Account Fraud in India?

One of our worst fears is returning home after a long day and finding out that somebody has broken in and stolen our goods and belongings. This fear is so prevalent and real that we have appropriate security measures in place such as locks, CCTVs, security guards, gated societies etc.

Demat account fraud

We keep our valuable possesion in high security lockers situated in banks. When it comes to banking frauds such as caller scams, credit card frauds etc. we have been made aware of them in recent times as well. But the third kind of scam/fraud that most people are not even aware that can happen with them is a demat account fraud/scam.

I know it sounds surprising and confusing but in recent times such frauds are becoming increasingly more common. Hackers have now found new ways to hack your account and drain it of your hard earned money.

However after all is said and done the good thing is that we as the users still have more than enough control in such situation to avoid getting hacked in the first place itself. In this article we will be outlining all different ways in which you can greatly increase the security of your demat account and ensure that there is little to no chance of it being hacked by someone else.

How Do Hackers Hack Your Demat Account?

The way hackers go about this is kind of similar to credit card frauds.

The victim usually gets a call from the hacker who poses as your broker. They will express concers towards you such as your account turning dormant or that you need to update your email, re-authenticate your KYC etc etc.

In doing so they will either try to get you to give them your password or get an OTP which can then be used to access said account.

After this the hacker can buy, sell or do whatever he wants with the shares that you have and in doing so take the money out of your demat account and transfer it to another by buying worthless shares or doing risky trades.

How Can You Protect Yourself from Demat Card Hack?

Now let us talk about the steps you can to better protect yourself against such fraud.

Of all the ways we will be mentioning some of them are built-in features in the applications that you use to manage and run your demat accounts.

If the service/app that you are using does not provide these features it is highly advised that you ditch it and change to one that does have these security features.

Be Aware Of Such Frauds

If you actually think about it, it seems pretty conusing as to why your broker will contact you incase of any kind of problems such as updating your email id. It is simply not a cost effective move for the company and matters like these require you to contact your brokers or a support team, which is why a general rule of thumb is to never believe such calls and always treat them as another person trying to trick you into a scam.

TOTP (Time based OTP)

TOTP apps allow you to effectively change your password every 15secs. This means that even if all your accounts across any platform have the same password you are still going to need a 6 digit code which changes every 15 secs making your accounts very secure

Don’t Link Your Account

On a lot of 3rd party websites/apps you have the option to automatically sign in using your Google or Facebook account. Some apps do the exact same thing but with your demat account, in such cases do not link them together since if the 3rd party app or website gets hacked it may lead to personal and valueable information about your own account to be in the wrong hands.

Know What You Want To Invest In

Usually when we as users open an account both online or offline our broker wants us to open all types of investment accounts such as currency, equity, commodity etc. Our advice would be to avoid this, only open those investment accounts that you will actually be using to invest in. For example if you are going to only invest in stocks then you should only have an equity account active and the the rest should be dormant. This helps in the case where in if a hacker might get access to your demat account he/she cannot sell your stocks and then buy risky things such as future options which can cause you to take a loss.

Revoke POA And Use T-PIN

If you have given your broker/broking app the POA or Power Of Attorney to buy/sell your shares it is a good idea to revoke that and instead use a T-PIN system wherein every time you have a buy or sell order it generates an OTP which need to be put in as well to successfully execute the order. This can save you from any kind selling or buying from hackers and if you detect suspicious activity then you can use a kill switch to pause all activities in your account.

Avoid Keeping Idle Funds

Do not keep funds that you do not need in your demat account. Only add funds when you want to buy something and only add how much you need at that time. These days through the use of UPI it takes less than 2 mins to add funds to your account.


These were some of the ways to better protect yourself against frauds or scams. It is also a good idea to spread awareness about such scams especially to older people as they are more prone to online frauds.

Rahul Sharma

Leave a Reply

Your email address will not be published. Required fields are marked *