Demat Debit and Pledge Instruction (DDPI)

Demat Debit and Pledge Instruction (DDPI) allows you to authorise specific debits and pledges from your demat account without approving every eligible transaction separately through a CDSL T-PIN and OTP.

• DDPI came into effect on 18 November 2022.
• It can be used for settlement obligations, pledging or re-pledging securities, eligible mutual fund transactions, and tendering shares in open offers.
• DDPI is not compulsory for investors.
• You can use a physical DIS or eDIS instead if you do not opt for DDPI.
• Existing POAs can continue until they are revoked.
• DDPI gives limited authorisation only for the purposes allowed under the regulatory framework.

Demat Debit and Pledge Instruction (DDPI) is a document through which you authorise your stock broker and depository participant to access your Demat account for specific purposes.

For example, suppose you hold 20 shares in your demat account and place an order to sell 5 shares. If DDPI is active, the authorised securities can be transferred towards settlement without requiring you to separately approve the debit using a CDSL T-PIN and OTP.

DDPI came into effect on 18 November 2022. It serves the purposes for which new POAs are no longer executed under SEBI's DDPI framework. Existing POAs, however, can continue until they are revoked.

SEBI permits DDPI for the following purposes:

1. Transferring securities towards stock exchange-related delivery or settlement obligations arising from trades placed through the same stock broker.
2. Pledging or re-pledging securities to meet margin requirements.
3. Mutual fund transactions executed through stock exchange order-entry platforms.
4. Tendering shares in open offers through stock exchange platforms.

DDPI has several functions related to the debit and pledge of securities.

1. Enhanced security

DDPI provides limited authorisation for specified demat account activities. The authority given through DDPI applies only to the permitted purposes instead of providing unrestricted access to the investor's securities.

For example, authorisation given to settle a share sale cannot automatically be used for an unrelated demat account transaction.

2. Transparent transactions

DDPI clearly specifies the activities for which an investor gives authorisation. This makes it easier to understand what the broker or depository participant is permitted to do with securities held in the demat account.

3. Investor control

DDPI gives you the choice of authorising specified demat account transactions. You are not required to use DDPI and can choose physical DIS or eDIS instead.

4. Compliance with regulatory changes

DDPI was introduced by SEBI as a more limited authorisation mechanism for specified securities transactions.

Effective date: 18 November 2022

Existing POAs remain valid until revoked, but new POAs are no longer executed for the purposes covered under DDPI.

5. Efficient settlements

DDPI simplifies authorisation for eligible securities debits and pledges. Once it is active, you generally do not have to separately approve every eligible share sale using a T-PIN and OTP.

For example, if you sell shares held in your demat account, DDPI can authorise their transfer towards the settlement obligation after the sell order is placed.

Demat Debit and Pledge Instruction authorises specified debits and pledges from your demat account. Once DDPI is active, you may not need to enter your CDSL T-PIN and OTP separately every time you sell eligible shares.

The exact online process may differ depending on the broker or depository participant.

How to activate DDPI online

1. Log in to your broker or trading platform.
2. Open the Account section.
3. Go to the Demat or account services option.
4. Select the option to enable Demat Debit and Pledge Instruction (DDPI).
5. Review and accept the applicable terms and conditions.
6. Choose the e-sign option, such as “Sign Now”, where available.
7. Enter the required Aadhaar details if Aadhaar-based e-sign is used.
8. Request the OTP and complete the verification process.

How to activate DDPI offline

Some investors may have to complete DDPI offline depending on the account type and the facilities offered by their broker or depository participant.

The offline process may include:

1. Downloading and printing the DDPI form provided by the broker.
2. Signing it with the signature registered for the demat account.
3. Adding the required seal or authorisation in the case of eligible non-individual accounts.
4. Sending or submitting the completed form to the broker at the specified address.

For a minor demat account, the guardian associated with the account is generally required to sign the relevant DDPI document.

Additional details

• Client ID: The Client ID forms part of your demat account identification details.
• Processing charge: A DDPI processing charge may be imposed by the broker. The amount depends on the broker's applicable charges.
• Activation time: Processing time depends on the broker or depository participant and its verification process.

DDPI may be submitted online or offline depending on the facilities offered by your broker or depository participant.

If online submission is available, you can generally complete the process through your account. If it is unavailable, you can obtain the DDPI form from your broker and submit the completed document through the permitted offline process.

For an online submission, the process may include:

1. Open your trading and demat account portal.
2. Visit the Profile or account settings section.
3. Select the DDPI submission or activation option.
4. Enter the required demat account details.
5. Review the DDPI authorisations displayed on the form.
6. Complete the required e-stamping or electronic documentation, where applicable.
7. E-sign the required documents using the available verification method.
8. Submit the request after completing OTP or other required authentication.

The exact documentation, charges, processing period, and verification steps can vary between brokers and depository participants.

The transition from POA to DDPI under the Securities and Exchange Board of India (SEBI) framework introduced a more specific form of authorisation for certain demat account activities.

1. Authorisation scope

POA: Power of Attorney was traditionally used to give the broker authority to carry out specified activities on behalf of the investor.

DDPI: DDPI specifically covers defined demat debit and pledge activities connected with securities trading, settlement, margins, eligible mutual fund transactions, and open offers.

2. Limited purpose

POA: POAs were used before DDPI became the prescribed authorisation mechanism for the activities now covered under DDPI.

DDPI: DDPI restricts the authorisation to the purposes permitted under the SEBI framework.

This makes the limits of the authorisation clearer. For example, DDPI for settlement allows securities to be debited to meet the settlement obligation arising from your trade.

3. Risk and security

POA: Concerns about possible misuse of POA were one reason SEBI introduced the DDPI framework.

DDPI: DDPI limits authorisation to clearly specified securities-related activities. This reduces the scope of authority available under the instruction.

4. Regulatory compliance

POA: Existing POAs can continue to remain valid until they are revoked.

DDPI: New POAs are no longer executed for the purposes covered by DDPI. Investors can use DDPI or complete settlement themselves through physical DIS or eDIS.

Investors who do not want to use DDPI can complete eligible securities debit instructions through a physical Delivery Instruction Slip (DIS) or electronic DIS (eDIS), depending on the available facility.

A DIS can be understood as an instruction you give to your depository participant to debit or transfer securities from your demat account.

The treatment of POA and DDPI can be summarised as follows:

Effective date of DDPI: 18 November 2022

DDPI therefore does not mean that every new investor must sign a DDPI. It is one of the available methods for authorising specified demat account transactions.

No. DDPI is not compulsory for trading or investing in the securities market.

SEBI allows you to choose between DDPI and completing the relevant settlement instructions yourself through physical DIS or eDIS. Existing POAs also remain valid until they are revoked.

For example, suppose you sell shares but have not activated DDPI. You can still authorise the required debit using the applicable DIS or eDIS process instead.

DDPI may reduce the need to complete separate authorisation each time for eligible transactions. However, whether you choose DDPI depends on the facilities and authorisation method you prefer.

DDPI allows a stock broker and depository participant to carry out specified actions involving securities in your demat account after you have authorised them through DDPI.

Its permitted uses include:

For example, when you place a sell order for shares held in your demat account, DDPI can authorise the required transfer of those shares towards the settlement obligation without separate T-PIN and OTP authorisation for that transaction.

DDPI offers investors a controlled way to authorise specific debits and pledges from their demat accounts. It can be used for settlement obligations, margin-related pledging or re-pledging, eligible mutual fund transactions, and open offers. DDPI is not compulsory, and investors can use physical DIS or eDIS instead. Existing POAs also remain valid until revoked. Before activating DDPI, investors should understand its scope, charges, processing steps, and the facilities offered by their broker or depository participant.