Why Zerodha discontinued the demat POA and moved to DDPI
The broker demat power of attorney (POA) is the authorisation a client once gave a stockbroker to debit securities from the client’s demat account and deliver them to the exchange, which SEBI discontinued for new clients and replaced with the Demat Debit and Pledge Instruction (DDPI) through circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44, dated 4 April 2022, effective for new clients from 1 September 2022. Zerodha adopted the DDPI for new clients from 19 November 2022, while leaving every POA submitted earlier valid until revoked.
The change is one of the clearest examples of Indian market regulation reacting to a specific failure. The broad POA gave a broker standing authority to move securities out of a client’s demat, and a handful of brokers used that authority to debit holdings the client never instructed them to touch. SEBI’s response ran in stages between 2020 and 2022: it first made the POA optional, then built CDSL eDIS and the TPIN as a per-sell alternative, and finally defined the DDPI, a narrow mandate that does the legitimate jobs of a POA but cannot do the illegitimate ones.
This article sets out why the POA existed, the misuse that forced its retirement, the timeline of SEBI and CDSL circulars, what the DDPI changed for a client at the mechanical level, and how Zerodha implemented the switch.
Conflict-of-interest disclosure. This article is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this article does not carry it and earns no referral commission.
What the demat POA did and why it existed
A demat account holds securities in electronic form at a depository, CDSL or NSDL , under a beneficial-owner identification number. When you sell shares, those securities must be debited from your demat and delivered to the exchange to settle the trade. Someone has to authorise that debit. Before the digital authorisation tools existed, the practical way to let a broker settle your sells without a signed slip for each one was a power of attorney: a document giving the broker authority to operate the demat for that purpose.
The problem was scope. A POA written broadly authorised the broker to debit and transfer securities, and nothing in the document mechanically confined that authority to legitimate settlement. The depository participant executed debits the broker instructed under the POA, and the depository had a signed authorisation on file, so the debits looked valid. The control gap was that the authorisation was wide and the broker, not the client or the depository, decided when to use it.
The misuse that triggered the change
The case that defined the reform was Karvy Stock Broking Limited. SEBI found that Karvy had transferred securities belonging to clients into its own demat accounts by misusing the POAs those clients had given it. The figures are the centre of the story: Karvy moved securities worth about Rs 2,300 crore belonging to more than 95,000 clients, and used client collateral to fund its own positions and borrowings. SEBI barred Karvy from taking on new broking clients on 22 November 2019 and restrained it from acting on the client POAs, and the exchanges later expelled Karvy from membership.
Karvy was the largest case, not the only concern. The structural lesson SEBI drew was that a mandatory or broadly drafted POA concentrated too much unilateral power in the broker, and that the depository’s record of a valid POA was not a meaningful check when the POA itself authorised almost anything. The fix had to narrow what the authorisation could do and move the verification of each debit outside the broker’s control.
The timeline of the regulatory response
SEBI did not act in one circular. The reform ran across roughly two years and three mechanisms, summarised below.
| Date | Action | Effect |
|---|---|---|
| 22 November 2019 | SEBI bars Karvy from new clients, restrains use of client POAs | Triggering enforcement; about Rs 2,300 crore of client securities found misused |
| 1 June 2020 | CDSL introduces the TPIN-based eDIS pre-authorisation facility | A 6-digit TPIN, held by CDSL, lets a client authorise each debit without a POA |
| 27 August 2020 | SEBI circular makes the POA optional, not mandatory, and limits its scope | A broker can no longer require a POA to open an account |
| 4 April 2022 | SEBI circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44 defines the DDPI | Replaces POA for new clients; confines authorisation to settlement and pledging |
| 30 June 2022 | SEBI extension circular SEBI/HO/MIRSD/DoP/P/CIR/2022/91 | Effective date for new clients pushed from 1 July 2022 to 1 September 2022 |
| October 2022 | SEBI clarification widens the DDPI scope | Adds on-exchange mutual fund debits and tendering shares in open offers |
| 19 November 2022 | Zerodha adopts DDPI for new clients | Zerodha stops collecting POA; existing POAs unaffected |
Three things stand out in the sequence. First, the CDSL TPIN came two years before the DDPI; the per-sell eDIS authorisation was the first tool that let an investor avoid a POA entirely, by authorising each debit with a PIN that CDSL, not the broker, verifies. Second, SEBI made the POA optional in August 2020 before discontinuing it for new clients in 2022, a staged approach that avoided disrupting existing accounts. Third, the original 1 July 2022 effective date was extended to 1 September 2022 because depositories needed more time to change their systems, set out in the 30 June 2022 extension circular.
What the DDPI changed
The DDPI keeps the convenience of a POA, a standing authorisation so the client does not authorise every sell by hand, while removing the breadth that made the POA dangerous. SEBI confined the DDPI to four purposes:
- Transfer of securities to the exchange when the client places a sell order, to meet settlement obligations.
- Pledging and re-pledging of securities to meet margin requirements.
- Debiting mutual fund units when they are sold on stock-exchange order-entry platforms.
- Tendering shares when the client participates in a buyback, takeover or open offer through an exchange platform.
The first two came with the 4 April 2022 circular; mutual fund debits on exchange platforms and tendering in open offers were added by the October 2022 clarification that widened the scope. What unites all four is direction: each delivers securities to the exchange or into a regulated pledge, never off-market into a broker’s own demat. That single boundary is what a broad POA lacked. A DDPI cannot do what Karvy did, because moving securities to the broker’s own account is not one of the four permitted purposes.
A second change was format. SEBI noted that the POA had to be submitted offline because of Information Technology Act constraints on the documents that could be electronically signed, while the DDPI could be digitally signed. That is why a resident individual can activate or revoke a DDPI online with an Aadhaar e-sign, but the old POA, and a DDPI for a joint or non-individual account, runs through paper.
How this maps onto the eDIS and TPIN system
The DDPI did not replace the per-sell route; it sits alongside it. An investor who signs no DDPI sells through CDSL eDIS , authorising each debit with the CDSL TPIN and an OTP. That authorisation is valid for one trading day and CDSL caps a batch at 100 instruments, so a frequent seller faces repeated authorisation. The DDPI removes that repetition with a single standing mandate. The investor’s choice is therefore between two safe routes: per-sell eDIS, where nothing leaves the demat without a fresh TPIN, or a one-time DDPI fenced to four purposes. The discontinued POA was the third, broader option SEBI took off the table for new clients.
The cost picture is unchanged by the choice. A delivery sell at Zerodha attracts a depository participant debit charge of Rs 15.34 per scrip per day (Rs 3.5 CDSL, Rs 9.5 Zerodha, Rs 2.34 GST, as of June 2026), whether the debit is authorised by eDIS, a DDPI or a surviving POA. Activating a DDPI at Zerodha costs Rs 100 plus 18 per cent GST one time; revoking either a POA or a DDPI is free. The authorisation method changes the keystrokes, not the DP charge.
How Zerodha implemented the switch
Zerodha stopped collecting POA and adopted the DDPI for new clients from 19 November 2022. Clients onboarded after that date sign a DDPI if they want standing authorisation, or default to CDSL eDIS if they do not. Crucially, the change did not disturb the existing base: a client who had already submitted a POA kept it, valid until they chose to revoke it. That is consistent with the SEBI framework, under which the DDPI requirement applies to clients onboarded after the cutoff while authorisations given earlier by POA remain valid.
The practical residue is that, years on, three states of authorisation coexist on Zerodha accounts: a surviving pre-November-2022 POA, a DDPI, or neither, meaning eDIS. A client can read which one applies through how to check whether POA or DDPI is active on Zerodha . A client wanting to leave the per-sell TPIN behind activates a DDPI through how to avoid entering CDSL TPIN and OTP every time you sell ; a client wanting to remove a standing mandate uses how to revoke POA or DDPI mapped to Zerodha , which returns the account to eDIS . The migration mechanics for a client moving from an old POA to a DDPI are in how to convert POA to DDPI and the broader POA to DDPI transition .
See also
- Zerodha
- POA to DDPI transition
- How to sign DDPI on Zerodha
- How to convert POA to DDPI
- How to avoid entering CDSL TPIN and OTP every time you sell
- How to sell without POA or DDPI on Zerodha
- How to check whether POA or DDPI is active on Zerodha
- How to revoke POA or DDPI mapped to Zerodha
- Zerodha DDPI charge
- Zerodha eDIS TPIN OTP
- CDSL TPIN
- CDSL TPIN regime and eDIS
- How to generate CDSL TPIN on Zerodha
- TPIN pre-authorisation on Zerodha
- Validity of CDSL TPIN
- Delivery instruction slip
- CDSL block mechanism for pay-in
- DDPI requirement for SLB
- POA for SLB on Zerodha
- CDSL
- NSDL
- Depository
- Depository participant
- Demat account
- SEBI
- Zerodha Console
- Kite by Zerodha
- Zerodha joint demat holders
- Demat and remat of MF units
External references
- SEBI: Execution of Demat Debit and Pledge Instruction (DDPI), implementation circular (June 2022)
- Zerodha support: Demat Debit and Pledge Instruction (DDPI)
- Zerodha Z-Connect: What is DDPI in the stock market?
- Zerodha Z-Connect: CDSL introduces PIN-based pre-authorisation for selling stocks
- CDSL India
References
- SEBI circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44, dated 4 April 2022, Execution of Demat Debit and Pledge Instruction (DDPI) for transfer of securities towards deliveries and settlement obligations and pledging and re-pledging of securities.
- SEBI circular SEBI/HO/MIRSD/DoP/P/CIR/2022/91, dated 30 June 2022, extension of the DDPI implementation date for new clients to 1 September 2022.
- SEBI circular dated 27 August 2020 on the execution of power of attorney by clients in favour of stockbrokers and depository participants, making the POA optional and limiting its scope.
- SEBI enforcement against Karvy Stock Broking Limited, order dated 22 November 2019 barring new clients and restraining use of client POAs, following the misuse of client securities worth about Rs 2,300 crore.
- CDSL, introduction of the TPIN-based pre-authorisation (eDIS) facility for selling securities, effective 1 June 2020.
- Zerodha support, Demat Debit and Pledge Instruction (DDPI) (as of 20 June 2026): DDPI adopted for new clients from 19 November 2022; existing POAs unaffected.
WebNotes Editorial Team prepares factual reference articles based on publicly available regulatory documents and broker disclosures. WebNotes is not affiliated with Zerodha Broking Limited. Regulatory positions and charges are subject to change; verify current requirements at sebi.gov.in, cdslindia.com and support.zerodha.com before acting.