All You Need to Know About the New Demat Debit and Pledge Instruction’ (DDPI)

3 mins read
by Angel One

On a circular dated 6th October, 2022, the Securities and Exchange Board of India (SEBI) declared that the pre-existing Power of Attorney (POA) document that defined an important part of broker-client relationships in the stock market will be replaced by the new “Demat Debit and Pledge Instructions” (DDPI) document. 

What is DDPI?

Demat Debit and Pledge Instructions or DDPI is basically an agreement whereby investors/traders (i.e. clients of the stockbroker/depository participant) consent to allow their stockbroker to perform the following functions on their behalf – 

  1. Transfer of shares from the Demat account of the client to the exchange upon the sale of those shares by the client.
  2. Pledging/re-pledging of securities in favour of a trading member (TM) or clearing member (CM) in order to meet the margin requirements of the client.
  3. Debiting Mutual Fund units from the Demat account of the client upon their sale.
  4. Tendering or selling shares of the clients in open offers ( ie. buybacks/delisting/acquisitions) through stock exchange platforms.

How to submit DDPI for Angel One?

If you are opening your Demat account with Angel One, then the process of submitting your DDPI will be a part of the account opening procedure itself, whereby you will be asked to e-Sign to the DDPI among other things while setting up your Angel One account.

Things to remember

  1. The clients must provide their signature against each of the above four functions under DDPI separately. 
  2. The signature can either be a physical signature on the DDPI form or it may also be an eSign. 
  3. The above circular is effective from 18th November, 2022.
  4. The  DDPI  provided  by  the  client shall be registered in the Demat account of the client by the TM /CM.

Future of the existing POAs and DDPIs

In case a client has not given the POA to his/her stockbroker already, the client can opt for DDPI. However, if the DDPI is also not submitted, then the electronic delivery instruction slip (E-DIS) must mandatorily be submitted each time the stock sell transaction is made. 

Submitting e-DIS multiple times might be a hassle to a client and hence it is advisable that clients sign the DDPI at the earliest

Moreover,

a. If a POA request has been submitted already before 1st September 2022 then DDPI is not required to be submitted. 

b. But from 18th November 2022 onwards, only the DDPI request has to be submitted.

Reasons for introducing DDPI

  1. The POA had to be stamped and submitted physically which created a lot of trouble for both clients and brokers alike. But the DDPI can be electronically signed and submitted to brokers, saving time, space, effort and paper. 
  2. A clear and transparent DDPI curtails possible misuse of the POA given by clients to the broker. 

Conclusion

DDPI is an important document for seamlessly conducting your demat account operations. However, the process of signing your DDPI is extremely easy when done through an Angel One account. So do not worry, open demat account today with Angel One, India’s trusted broker!