The power of attorney on Demat accounts is a legal document that grants limited or full legal authority to the broker to operate your Demat account on your behalf. This document is not mandatory, but it is essential for the proper functioning of a Demat account. There is a lot of confusion and apprehension in India regarding this document, but signing a power of attorney is not required and no broker can deny you services if you do not want to grant you a power of attorney. A power of attorney is a letter of authorization that allows a person to represent or act on behalf of another person.
It is usually issued in favor of the broker so that they can debit the shares from your demat account without DIS when you sell them online. Almost all investors who open the Trading and Demat account for delivery-based trading give a limited POA to the broker. The general power of attorney authorizes the person to perform all general activities on behalf of the original holder. POA is a document that allows a broker to load sold shares from a demat account for delivery to the exchange.
According to SEBI, after the execution of the KYC document, the broker must deliver a copy of all documents. Due to regulatory measures taken by SEBI, the extent of damages due to improper use of power of attorney is greatly reduced. As an investor, you will get many benefits from granting a power of attorney, such as smooth and hassle-free operation of the demat account. Therefore, it is important to understand why power of attorney is required in demat accounts and how it can help you as an investor. Power of attorney is an important document that grants authority to your broker to operate your Demat account on your behalf without you having to authorize them for each transaction you make.
It is essential for proper functioning and smooth operation of your Demat account. It also helps protect you from any potential damages due to improper use of power of attorney, as SEBI has taken regulatory measures in this regard. In conclusion, it is important to understand why power of attorney is required in demat accounts and how it can help you as an investor. It grants authority to your broker to operate your Demat account on your behalf without you having to authorize them for each transaction you make, and it also helps protect you from any potential damages due to improper use of power of attorney.
