Safety is one of the topmost priorities in every arena of a human’s life. And when it comes to safeguarding your money or investments, it becomes very crucial. Therefore, even before entering the stock market and opening a demat account, the investors often question, is demat account safe?
But before diving into the answer, it is important to know why is a demat account required? A demat account is required to keep your securities or your shares in a safe and de-materialized form. SEBI has now completely banned the transfer of physical shares, making it crucial for almost every investor to have a demat account.
Now that we know that a demat account is required in the stock market, let us have a look at its safety.
Although, there are two major depositories in India, NSDL and CDSL that are meant to maintain your demat accounts. But when it comes to opening a demat account with a depository, it is not possible. For that, you will have to contact a concerned depository participant which we also called a stockbroker in layman language.
When you open an account with a DP, they are registered with either of the two depositories which in turn are supported and regulated by NSE and BSE. On top of this, this entire hierarchy is regulated by SEBI. This ensures that the demat account is safe and you can easily continue with your trading activities in the stock market.
All the regulations and close eye of SEBI ensure that there are negligible chances of fraud in your demat account. So, YES, it is safe to open a demat account.
Furthermore, depending on which depository the stockbroker is associated with, there will be a unique number assigned to you as a trading client.
For instance, for NSDL affiliated stockbrokers, you will be provided with an NSDL Demat Account number once the account is opened by you.
To ensure additional safety, SEBI has also made sure that a client is not forced to sign a POA or power of attorney with the stockbroker. It gives the stockbrokers a right to use your holdings for marginal requirements and also to sell your holdings.
So, is POA necessary for demat account, the answer is NO! The safety has increased with the introduction of CDSL TPIN as well which gives an individual complete control over his demat account.
Now, that we know that it is safe to open a demat account, let us look at the safest options.
Which Demat Account Is Safe?
When it comes to opening a demat account, there are few stockbrokers that hit the top list of investors’ choices. Some of them are:
Angel One needs no introduction in the stock market works as it has created a niche. With its consistent performance and zeal to keep up with the advancing technologies, it has attracted a good client base. But the question is, is it safe to open a demat account with Angel One?
Angel One is registered with SEBI (Registration number- INZ000161534), which gives it a better safety measure. It further has managed to garner a client base of 1564667.
On top of this, the broker provides great trading platforms and a reasonable brokerage to its clients. Also, Angel One is the listed company that makes it more reliable than its peers.
Now all these features make Angel One a good broker for you to open your demat account. What’s amazing is you won’t face any hassle to complete the Angel One KYC update online process as it requires following very simple steps.
Zerodha was one of the first brokers in the industry that come up with a discount brokerplan and then marked a presence in that industry. Zerodha is registered with CDSL, which gives it higher credibility and authenticity.
It is further registered with SEBI (SEBI registration number- INZ000031633). Zerodha also has an active client base of 3602074. This also gives new users an idea that there are a lot of existing clients of Zerodha making it a safer choice for the traders.
They also have Zerodha Kitewhich makes it easier for the clients to carry out easier transitions and trade efficiently.
Although, in addition to this, it is also important to keep external surveillance on your demat account to ensure additional safety.
ICICI is one of the leading private banks in the nation and it now offers a 3 in 1 demat account as well. It has been a trusted brand for several years. The SEBI registration number of the stockbroker is INA000000094.
Further, the stockbroker is registered with CDSL and NSDL. It is very important for a trader to keep a check on the depositories with which the stockbroker is registered. It is also important to see the current client base of the stockbroker to get a sense of how many people are interested and invested with the stockbroker.
As per the recent data, the active clients of ICICI direct are around 1580233, which is a good number. In addition to this, they have also only 0.03% complaints in accordance with their active clients.
So, if you agree with the brokerage plans and the services provided by the stockbroker, you can go ahead and open your demat account.
5paisa is another leading stockbroker of the country and is registered with SEBI. SEBI registration number of the same is INZ000010231. This gives the clients an idea of the safety of the stockbrokers as a regulating body is monitoring it.
It reduces the chances of fraud but even after that, you should keep a close eye on the other factors as well. The broker is registered with CDSL, giving its security factor another plus point. Over the years, the brokerage plans and the services provided by 5paisa have attracted a lot of clients, 870,405 to be precise.
The complaints, although very few have also been resolved 100%, giving the stockbroker better credibility. The safety of the stockbroker is also dependent on the efficiency and functioning of the app.
5paisa gives its users a great experience with both apps for desktop and mobile both. So, in a case, if you open a demat account with 5paisa, it is a safe option.
Is Groww Demat Account Safe?
Groww was founded in 2016, and even though it is a new player in the stockbroking industry, it still has managed to garner a lot of trust and credibility for its clients.
The easy user interface, ease of access, and beginner-friendly app have made them a staple in the industry. Since it is a new broker, a lot of people often doubt the safety of the Groww demat account. But to counter this doubt, the broker is registered with SEBI (INZ000301838) and with both the depositories as well.
It also has a good client base and technologically advanced services for the newer generations. But is this enough to trust the stockbroker.
Looking at the fundamentals of the company, it has recorded a loss of around Rs 7.5 crores in the last financial year. Such data is important to evaluate the performance and reliability of the stockbroker.
Upstox is another discount broker in the industry, with a client base of around, 2141095 clients. A lot of traders have shown their trust in the stockbrokers but the question is Upstox SEBI registered? The answer is yes! If you are thinking of opening a Upstox demat account, then there is safety on this end.
The SEBI registration number of Upstox is INZ000185137. Further, the stockbroker is also registered with both the depositories, adding an additional safety factor.
There have been complaints about the stockbrokers but the best part is that they have resolved the majority of the complaints. So, keeping everything in place, the stockbroker can be a safe choice for you if you are looking to start your stock market journey.
Is Paytm Demat Account Safe?
The majority of the Indian population have used Paytm in one sense or the other. But do you know that there is a Paytm money demat account? Yes, you can now open a demat account with Paytm as well. Paytm Money now has a client base of 85827.
Paytm is also registered with SEBI (Registration number- INA100009859). If we talk about the depositories, then the broker is also registered with CDSL.
It is important for you as an investor to know these details, so that you have an idea that the broker is authentic and has an answerability to the regulating bodies.
Now after looking at the details of the brokerage and other services of the broker, if you are willing to open a demat account with Paytm Money, you can go ahead.
With the shift from physical shares to storing the shares in the demat account, there has been an increase in security as well. But even after that, there have been cases of fraud.
So, therefore it is important for you to check the depository with which the stockbroker is registered. If your stockbroker is registered with either of the depositories, your shares will stay safe even if there are any problems with your stockbrokers in the future.
So, now you know that is it safe to open a demat account today, so why not do it? Open your demat account today and start trading.
Is Demat Account Safe FAQs
1. Is It Safe to Share Demat Account Number?
If you want to keep a proper check on your demat account, it is always advisable not to share your username or password with anyone. It can often lead to people misusing your demat account and can also drive you towards heavy losses.
2. Is Money Safe in Demat Account?
A demat account is all about holding your shares. And your money is kept in a linked trading account. Although now almost all the depository participants are making great efforts to enable topmost security for their clients, the safety of your money also depends on the DP that you choose.
So, it is important that you pick the right stockbroker to ensure that there is no challenges when it comes to keeping your holdings or money safe in your demat account.
3. Is it safe to open demat account online?
It is completely safe to have a Demat account online by signing up at the broker’s website. You can also reach us to “A Digital Blogger” with your specific requirement and we will help you in opening your account securely.
Still confused, which stockbroker offers safest demat account? Get in touch with us and we will assist you in choosing the best stockbroker and in opening a demat account online for free.