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Why I have been asked to sign a Power of Attorney while opening the Demat account with SBICAP?

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Limited Power of Attorney (PoA) to the broker is essential for online stock. Without it, the online sell transactions cannot be completed.

Read more about Power of Attorney - Explained with Examples

/article/power-of-attorney-for-demat-account-explained-faq/310/

The PoA allows the broker to withdrew the shares from your demat account to deliver it to the buyer when you sell them through your trading account.

The limited PoA also helps with:

  • Block/lien/pledge securities for margin requirement
  • Transfer charges on your Demat account to your trading ledger

In a way, signing the PoA smoothens and quickens the trading process and management of your securities.

Is Demat PoA to the broker is safe?

Yes, it is for the following reasons:

  • It's a limited PoA. It gives only certain permission to the broker.
  • SEBI and the stock exchanges regulate the transactions.
  • The broker cannot change customer information, withdrew shares without customer knowledge or misuse the demat account in any way.
  • The customer can revoke the limited PoA at any time.
  • The customer gets SMS alerts and account statements form Depository (CDSL and NSDL) for every transaction in demat account. This is beyond the broker's control.
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