The Securities and Exchange Board of India (SEBI), the primary regulator of the Indian stock market, has implemented new safeguards to strengthen security measures for dematerialized (demat) account transfers. This move aims to address investor concerns about fraudulent activity and could significantly improve investor confidence in the market.
Previously, investors raised concerns about unauthorized transfers from inactive demat accounts. SEBI’s new regulations directly target these anxieties by introducing stricter protocols:
- Ban on Pre-Signed DIS: Depository Instruction Slips (DIS), used to authorize security transfers, will no longer be accepted pre-signed. This eliminates the risk of someone else misusing a blank DIS.
- Limited DIS Issuance: New DIS will only be issued when the old one expires or gets lost. This reduces the number of DIS in circulation and minimizes the chances of them falling into the wrong hands.
- Verification for Inactive Account Transfers: If a transfer request originates from an inactive account, SEBI mandates verification from the account holder before proceeding. This additional step ensures legitimate authorization for any transfers from accounts with minimal activity.
- DIS Limit per Year: To further tighten security, SEBI restricts the number of DIS issuances per demat account to a maximum of 10 per year.
Building Trust in the Market
These new regulations by SEBI demonstrate a proactive approach to safeguarding investor interests. By plugging loopholes and strengthening verification processes, SEBI aims to create a more secure environment for demat account holders. This can lead to increased investor confidence, which is vital for the healthy growth of the Indian stock market.
Impact on Investors
Investors can expect a more secure and transparent demat transfer process. The new measures will likely require them to be more involved in authorizing transfers, especially for inactive accounts. However, these additional steps are a small price to pay for enhanced security.
The Road Ahead
SEBI’s move is a positive step towards a more robust Indian stock market. By prioritizing investor safety, SEBI paves the way for a future where investors can participate with greater trust and confidence.
