{"id":7015,"date":"2022-07-26T11:54:59","date_gmt":"2022-07-26T11:54:59","guid":{"rendered":"https:\/\/signdesk.com\/in\/?p=7015"},"modified":"2025-09-17T07:31:57","modified_gmt":"2025-09-17T13:01:57","slug":"sebi-introduces-ddpi-to-replace-poa","status":"publish","type":"post","link":"https:\/\/melento.ai\/en-in\/blog\/sebi-introduces-ddpi-to-replace-poa","title":{"rendered":"SEBI Introduces Demat, Debit & Pledge Instruction (DDPI) To Replace PoA"},"content":{"rendered":"

\"DDPI<\/p>\n

SEBI Releases Fresh Guidelines For PoA & DDPI\u00a0<\/b><\/span><\/h2>\n

The Securities and Exchange Board of India (SEBI) issued a circular dated April 4, 2022, stating that the Power of Attorney (PoA) usually granted to stockbrokers and depositories will no longer be allowed from July 1, 2022.<\/p>\n

The PoA will, instead, be replaced by a separate Demat, Debit, and Pledge Instruction (DDPI).<\/p>\n

According to the SEBI circular<\/a><\/span><\/strong> – \u201cThe DDPI shall serve the same purpose of PoA and significantly mitigate the misuse of PoA\u201d.<\/p>\n

The DDPI will be used for two key purposes originally assigned to the PoA as per the PoA Guidelines of 2020<\/a><\/strong><\/span>. These two functions are – the transfer of securities and the pledging\/re-pledging of securities.<\/p>\n

This is not to say that the PoAs currently in use will all be nullified. Existing PoAs will remain valid until revoked by the client, and all PoAs going forward will be optional.<\/p>\n

The key difference to note between PoAs and DDPIs is that DDPIs can be <\/b>eStamped & eSigned<\/b><\/a><\/span>, while Schedule 1 of the IT Act states that PoAs can\u2019t be digitally executed.<\/p>\n

Key Takeaways From SEBI\u2019s DDPI Circular<\/b><\/span><\/h4>\n
    \n
  1. Stockbrokers cannot take PoA from onboarded clients after July 1, 2022.<\/span><\/li>\n
  2. PoAs will effectively be replaced by DDPIs.<\/span><\/li>\n
  3. DDPIs can be digitally signed and eStamped by clients or executed physically.<\/span><\/li>\n
  4. All existing PoAs will still be valid unless revoked by the client.<\/span><\/li>\n
  5. PoAs & DDPIs are still optional & brokers must obtain consent from clients before executing either one.<\/span><\/li>\n<\/ol>\n

    What is PoA – A Quick Refresher\u00a0<\/b><\/span>\u00a0<\/span><\/h2>\n

    Stockbrokers & depositories are required to obtain permission from investors to conduct transactions on their behalf.<\/p>\n

    Typically brokers would obtain permission slips for every single transaction, but this is not feasible for brokers and firms with large client bases. Hence brokers have taken to using PoAs as an umbrella solution.<\/p>\n

    PoAs also needed to be stamped and then signed by both clients and brokers.<\/p>\n

    With digital execution facilities disallowed for PoAs, brokers and investment firms had to fall back on manual stamp paper procurement.<\/p>\n

    Stockbrokers & depositories are already familiar with what this entailed.<\/p>\n

      \n
    1. Co-ordinating with multiple stamp paper vendors<\/a> <\/strong>and field agents<\/span><\/li>\n
    2. Adjusting client timelines based on inconsistent stamp paper availability<\/span><\/li>\n
    3. Delays from non-compliance with stamping laws – stamp paper defacement, errors in stamping details, document execution errors<\/span><\/li>\n
    4. Frequent client drop-offs due to slow processing times<\/span><\/li>\n
    5. Logistical challenges from document transport, storage & management<\/span><\/li>\n
    6. Business loss from long turnaround times and friction in client journeys<\/span><\/li>\n<\/ol>\n

      With the introduction of DDPI, stockbrokers can leverage digital stamping and eSignatures to overcome these challenges and create a smooth document execution journey for investors.<\/p>\n

      DDPI – The New Digitally Executable PoA\u00a0<\/b><\/span><\/h2>\n

      DDPIs will replace PoAs, effective from July 1, 2022, and can be digitally stamped & signed by clients.<\/p>\n

      According to SEBI\u2019s circular, DDPIs will be considered \u201cVoluntary Documents\u201d, which means that they will be executed only after obtaining the client\u2019s consent.<\/p>\n

      Here\u2019s what DDPIs will enable stockbrokers to do, after being eStamped & eSigned –<\/p>\n

      \"DDPI<\/p>\n

        \n
      1. Transfer securities<\/strong><\/span> held in the beneficial owner (BO) account of clients towards Stock Exchange-related deliveries\/settlement obligations arising out of trades executed by clients on the Stock Exchange through the same stockbroker.<\/span><\/li>\n
      2. Pledge or re-pledge securities<\/strong><\/span> in favor of the trading member (TM)\/clearing member\u00a0 (CM) to meet margin requirements in connection with the trades executed by clients on the Stock Exchange.<\/span><\/li>\n<\/ol>\n

        This essentially means that DDPIs allow stockbrokers to handle securities & make transactions on behalf of clients. But without going through the painstaking manual stamping and signing process of PoAs.<\/p>\n

        How To eSign & eStamp DDPIs<\/b><\/span><\/h2>\n

        Melento (Formerly SignDesk)\u2019s Digital Document Execution solution<\/span><\/a><\/span> combines templatization, digital stamping & eSignatures to offer a seamless and complete platform for DDPI execution.\u00a0<\/span><\/p>\n

        Here\u2019s how stockbrokers can get DDPIs eStamped & eSigned securely within minutes.<\/p>\n

        \"<\/p>\n

        Step 1<\/b><\/span>: DDPI Templatization<\/b><\/span><\/span><\/p>\n

        We\u2019ve templatized the DDPI form in our template library.<\/p>\n

        This means that stockbrokers can choose the DDPI template, make several copies, edit the DDPI template as per their requirements, and push DDPIs to execution in bulk.<\/p>\n

        Step 2<\/b><\/span>: Enter E-Stamping Information<\/b><\/span><\/span><\/p>\n

        Once the DDPI template is selected, brokers enter E-Stamping information into the Melento (Formerly SignDesk) portal. This includes first & second-party details, stamp state, stamp paper denomination, document type, etc.<\/p>\n

        Melento (Formerly SignDesk) can also customize our solution to make sure this information is auto-filled.<\/p>\n

        Step 3:<\/b><\/span> Pay Stamp Duty Online\u00a0<\/b><\/span><\/span><\/p>\n

        Melento (Formerly SignDesk) is integrated with SHCIL (Stockholding Corporation of India Ltd) to enable real-time stamp duty payment on instruments.<\/p>\n

        Stamp duty is debited from the user\u2019s digital wallet and stamp papers are pre-ordered to ensure availability.<\/p>\n

        To complete E-Stamping, the DDPI is merged with stamp papers, and an index is printed on each stamp paper, with QR codes created to instantly verify the stamping information.<\/p>\n

        Physical stamp papers are defaced accordingly and delivered to the broker upon request.<\/p>\n

        Melento (Formerly SignDesk)\u2019s dashboard allows brokers to track stamping status throughout this process.<\/p>\n

        Step 4:<\/b><\/span> Invite the Client For Signatures<\/b><\/span><\/span><\/p>\n

        After E-Stamping the DDPI, brokers can invite clients to sign the DDPI via email or SMS. Clients log into Melento (Formerly SignDesk) and preview the DDPI before eSigning<\/a>.<\/span><\/p>\n

        Step 5:<\/b><\/span> E-Sign DDPI Remotely<\/b><\/span><\/span><\/p>\n

        Stakeholders can eSign<\/a> <\/span>use electronic or Aadhaar eSignatures to sign via OTP, or digital signatures to execute the DDPI.<\/p>\n

        Step 6:\u00a0Download Executed DDPI\u00a0<\/b><\/span><\/span><\/b><\/span><\/p>\n

        The eStamped and eSigned DDPI is finally downloaded by all stakeholders. An audit trail is also created for document activities.<\/p>\n