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Freeze your Demat account when not in use for security

I’m sure I’m not the only one who invests in stock markets only when there are good IPO’s and completely forget about them afterwards. What ever I have put into stock markets till date have been through IPO’s and I have no intention to sell them or trade in other stocks. Just to diversify my free money, I apply for public issues and let it do what it wants.

I’m sure there are others who do the same who basically put any excess money into IPO’s and see where they will be after a decade or so.

Here is a nice (security) tip that I came across today in a news paper. According to it, you can freeze your Demat account when not in use just by giving freeze instructions to your DP (Depository Participant). By doing this, you can lock credit or debit transactions from your account until you give de-freeze instructions again to your DP. Or, if you are going some where, you can give an instruction to your DP to freeze your demat till so and so date. After that date, your account will automatically be de-freezed (if no date is given, the account will be freezed till your give de-freeze instructions).

Not only can you freeze your entire account, you can also freeze individual shares of a company so that no transactions can occur on that scrip.

Why should you freeze at all?

For general overall security. There have been instance previously where unauthorized transactions have taken place, missing shares etc. If you’re trading account details are known to someone, they could easily make a trade or sell your existing shares. Also, your brokers can use your shares and lend them to other intra-day traders. This is not a problem by itself, but if you absolutely don’t want anyone to touch your shares, you can freeze your account.

I have checked my online trading account if I can use the freeze option online, but unfortunately it appears that you have to visit your DP’s office and fill out the freeze form.

A point to keep in mind though; you still have to pay your annual (or what ever process your broker follows) demat maintenance charges.

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