Power of Attorney (POA) in a Demat Account – A Complete and Simple Guide

A Demat account holds your shares in electronic form. To make trading easier, brokers often request a document called Power of Attorney (POA). Many investors find POA confusing. This guide explains POA in simple words.

What is a Demat Account?

A Demat account is used to store shares, bonds, and securities digitally.

What is POA?

A Power of Attorney is a legal document that allows someone (usually your broker) to perform certain actions on your behalf, mainly related to share transfers during selling.

Why is POA Needed?

Without POA, you must submit a Delivery Instruction Slip (DIS) for every sale. POA makes the process faster.

Types of POA:

• Limited POA
• General POA

SEBI Rules:

• POA is optional
• Cannot be forced
• Must be limited in use
• Can be revoked anytime 

Benefits:

• Fast settlement
• Smooth online trading 

Risks:

• Misuse risk if the broker is dishonest 

Conclusion:

POA adds convenience but should be understood clearly before signing.

Disclaimer: 

This blog is for awareness and education only. It is not legal or financial advice.