How to Protect Demat Account from Fraud?
- 19th February 2026
- 05:00 PM
- 6 min read
If you are an investor and seeking an answer to how to protect your Demat account from fraud, you can do it by using strong credentials, regularly checking your account, avoiding the sharing of OTPs and more.
You must protect your Demat account just like a bank account that holds your hard-earned money. Your Demat account stores all the securities you have invested in and must be protected, and if compromised, you might lose those holdings.
With more than 19.24 crore Demat accounts in India and rising, the risks of fraud on Demat accounts also rise. Read this blog and note how many ways you can keep your account safe.
Best Ways to Protect Your Demat Account from Fraud
As a Demat account holder in India and to protect your shares, ETFs, mutual funds, etc, you must employ the following measures:
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Secure Login Credentials and Passwords
A strong login credential, such as the password of your Demat account,t acts as a primary line of defence against a fraudster harming your Demat account. Therefore, to protect your Demat account from fraud, you must use an alphanumeric password for your account. To do this, use a mix of upper and lowercase letters, special characters and numbers. You should also keep using a complex combination and make the password 8-10 characters long.
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Monitor Demat Account Transactions Regularly
Stay informed about your Demat account by routinely checking it. Look for any unauthorised transactions in your account and report any found to your broker or to the relevant authorities. Thus, an immediate action can solve any fraud-related concerns at the very beginning, protecting you from any substantial financial losses.
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Avoid Sharing OTP and T-PIN
Selling shares or other securities from your Demat requires a 6-digit T-PIN and an OTP. It replaces the previous requirement of giving power of attorney to your broker. Therefore, it is essential to remain vigilant and never share your OTP with anyone. Fraudsters often pose as representatives of your Depository Participant or broker, requesting sensitive information to address account-related concerns.
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Use Only SEBI-Registered Brokers
To learn how to protect Demat account from fraud, you must also ensure that you create your Demat account from a SEBI-registered broker such as the PL Capital Group – Prabhudas Lilladher. As per the NSE, any unauthorised broker, i.e. not registered with SEBI, might try to defraud you. Check for the 12-character-long SEBI registration number of your broker, often starting with ‘INZ’.
With PL, invest in stocks, mutual funds, ETFs, gold bonds and more with the PL Capital app. Download the app, create a Demat account and start investing today!
Is a Demat Account Safe from Fraud?
When you create a Demat account with a Depository Participant (DP) or a SEBI-registered broker, you register with either the NSE or the BSE or both. These depositories oversee the actions of those depository participants or the brokers.
Also, the SEBI monitors the entire framework, guaranteeing a layer of security, while making your activities in the stock market easier and worry-free for you. The SEBI has also ensured that, as an investor, you are not obligated to sign any power of attorney with your broker, reducing the chances of fraud further.
However, instances of fraud might still be there, which recommends that you be vigilant on your part. For example, the I4C, or the Indian Cybercrime Coordination Centre in FY26, reported a total loss of INR 19,812 crore and 77% of them were related to investments.
Therefore, protecting Demat accounts from fraud becomes absolutely necessary. Apart from the safety measures by the SEBI, you must practice the above-mentioned security tips, update or change your passwords periodically, and enable SMS and email notifications to get instant updates, etc, on your Demat account.
Conclusion
To protect your Demat account and its holdings, you must learn how to protect Demat account from fraud. It is because individuals practising unethical approaches might try to lure you with attractive investment schemes. They might even invade your Demat account. These might lead to data theft, loss of your holdings, and might even impact your linked bank account, leading to substantial financial losses.
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FAQs on How to Protect Demat Account from Fraud
1. How can I protect my demat account from fraud?
To protect your Demat account from fraud, you must take some preventive steps proactively. You must use passwords that are hard to guess, contain alphanumeric values, etc. Periodically check your account transactions and refrain from sharing OTPs, TPINs, etc.
2. What are the common Demat account frauds?
Some of the common Demat account frauds include phishing attempts. Here, fraudsters use fake websites resembling the login pages of an investment portal. Also, there are instances where fraudsters approach you as representatives of your broker, promising attractive returns in a shorter span, alluring you to share your credentials and other details.
3. Can a Demat account be hacked?
Yes, hackers might get access to your Demat account if you use public and unsecured wifi while accessing your account. Also, sharing passwords with unauthorised personnel also compromises your Demat account holdings.
4. What should I do if my Demat account is misused?
In case you think your Demat account is compromised, such as when you see unauthorised transactions on your account or an unauthorised login attempt, you must raise a concern immediately. It is advisable that you request your respective broker to freeze your Demat account to prevent it and its holdings from any further damage.
