Demat Debit and Pledge Instruction (DDPI): Role and Benefits

In India’s dynamic capital markets, investor protection and regulatory transparency have gained significant importance. To support this shift, the Securities and Exchange Board of India (SEBI) introduced the Demat Debit and Pledge Instruction (DDPI). This document authorises brokers to debit or pledge securities held in a demat account for specific transactions, thereby improving the safety and efficiency of trade execution.

DDPI replaces the previously used Power of Attorney (PoA), which allowed broader and often riskier control to brokers. The new mechanism ensures that only regulated, limited actions can be carried out—enhancing investor trust and aligning with SEBI’s commitment to accountability.

Key highlights of DDPI:

• Enables brokers to debit securities for sale and pledge them for margin
  

• Offers improved protection compared to traditional PoA
  

• Mandatory for delivery-based trades unless alternate authorisation is provided
  

• Supports investor autonomy with revocable rights
  

• Designed to minimise the misuse of demat accounts

The Demat Debit and Pledge Instruction (DDPI) is a regulatory document that authorises brokers to carry out specific actions—such as debiting or pledging securities—on behalf of the demat account holder. Unlike a Power of Attorney (PoA), which grants broad access, DDPI is limited in scope and purpose.

Through DDPI, brokers can:

• Debit securities from the investor’s demat account to fulfil sell trades
  

• Pledge or re-pledge securities as collateral for margin requirements
  

• Facilitate participation in corporate actions such as buybacks and delistings
  

This limited authorisation helps maintain investor control and reduces the risk of misuse associated with blanket permissions.

The Demat Debit and Pledge Instruction enables specific, SEBI-approved functions that help streamline trading while ensuring investor security. It limits broker activity to a defined set of actions, which protects clients from unauthorised access and operational errors. Key functions performed through DDPI include the following:

Debit of Securities for Sale Transactions

Allows brokers to automatically debit securities from the investor’s demat account for delivery-based trades. This eliminates the need for manual Delivery Instruction Slips (DIS).

Pledging of Securities for Margin

Enables brokers to pledge securities to clearing corporations on the client’s behalf. The securities remain in the client’s account but are marked as pledged for margin.

Streamlined Execution and Settlement

Automates trade settlements, reducing delays and manual errors such as incorrect ISIN entries or mismatched quantities.

Improved Transparency and Control

DDPI is limited to specific transactions, offering greater protection than a traditional PoA. Ownership remains with the investor, even for pledged securities.

Revocable Authorisation

Investors can revoke the DDPI at any point by notifying their broker or Depository Participant (DP).

The following table highlights the key differences between DDPI and POA:

The introduction of DDPI by SEBI was a direct response to the increasing need for secure and standardised authorisations in India’s capital markets. While the Power of Attorney (PoA) allowed brokers to perform a wide range of actions on behalf of investors, it also posed a risk of misuse due to its broad scope.

To address these concerns and build investor trust, SEBI launched DDPI as a safer and more transparent alternative.

Primary objectives behind introducing DDPI:

• Limit the powers granted to brokers through broad-based PoAs
  

• Enhance transparency and accountability in demat operations
  

• Reduce the possibility of fraudulent transactions
  

• Provide a standardised process for all Depository Participants (DPs)
  

Timeline of Implementation:

• Circular issued: 20 July 2022
  

• Effective date for new accounts: 18 November 2022
  

• From this date onwards, brokers are not permitted to offer PoA as the default option for authorising demat transactions.

DDPI functions as a controlled authorisation tool, enabling brokers to perform select transactions on behalf of investors—strictly as per SEBI guidelines. It does not offer open-ended access like a traditional PoA. Instead, it allows only those actions that are necessary for trade execution and regulatory compliance.

Authorised actions permitted under DDPI:

• Debit securities from the investor’s demat account when a sell order is executed
  

• Pledge or re-pledge securities to obtain margin funding
  

• Tender shares in corporate actions such as buybacks or delisting offers
  

Actions not permitted under DDPI:

• Transferring funds from the investor’s linked bank account
  

• Making changes to account details or profile information
  

• Accessing or operating the demat account for general management
  

By narrowing the scope of authorisation, DDPI ensures that brokers can act only within clearly defined boundaries, thereby minimising risks to investors.

Investors can activate the Demat Debit and Pledge Instruction through either an online or offline method, depending on the services provided by their broker or Depository Participant (DP). The process is simple and can typically be completed in a few working days.

Online Activation (if supported by your broker)

1. Log in to your broker’s app or web platform.
   

2. Navigate to the Profile, Settings, or DDPI section.
   

3. Read and accept the DDPI terms and conditions.
   

4. Authenticate using Aadhaar-based e-sign via OTP.
   

5. Submit the request and await confirmation, which is usually sent via email or SMS.
   

Offline Activation

1. Download the DDPI form from your broker’s website or obtain it at a branch.
   

2. Fill in all required fields and affix your signature.
   

3. For joint accounts or HUFs, ensure all required co-signatories complete their part.
   

4. Attach supporting documents such as identity proof or DP account proof.
   

5. Submit the completed form to your broker or DP office.
   

6. Processing typically takes 2 to 3 working days.

A Delivery-Based Power of Attorney (DDPI) offers several advantages that enhance security, convenience, and control for investors:

1. Security

With DDPI, brokers cannot perform transactions beyond SEBI-permitted actions, limiting fraud risk.

2. Operational Convenience

Investors don’t need to enter CDSL T-PIN or OTP for every sell or pledge action—DDPI enables auto-authorisation.

3. Regulatory Clarity

Each DDPI transaction is backed by SEBI's circulars and is monitored with audit trails.

4. Reduced Paperwork

Most brokers support online DDPI activation, avoiding in-person paperwork.

5. Enhanced Control

Investors have the power to revoke DDPI whenever desired, increasing autonomy over their demat accounts.

While both DDPI and PoA serve the purpose of enabling broker-initiated actions in a demat account, they differ significantly in scope, risk, and investor control. DDPI offers a more secure, transparent, and transaction-specific alternative that aligns with SEBI’s updated regulatory framework.

Here’s a comparative look at the two:

Investors who continue to use PoA can choose to revoke it and switch to DDPI for a more secure authorisation method.

DDPI can be availed by a wide range of demat account holders, provided they meet certain procedural and documentation requirements. SEBI has outlined specific conditions depending on the type of account to ensure secure and verifiable authorisation for each investor category.

Eligibility and additional requirements by account type:

These criteria ensure that DDPI is issued in compliance with legal norms and account-specific regulatory standards.

Investors have the flexibility to revoke or update their DDPI at any time, providing enhanced control over their demat account activities. Both revocation and modification require informing the broker or DP and may involve either digital or physical procedures, depending on the provider.

Revoking DDPI

To cancel your DDPI authorisation, you can follow either of the methods below:

• Submit an online request through your broker’s platform (if supported)
  

• Send a signed revocation letter to your broker or Depository Participant
  

• Once revoked, DDPI-based automatic transactions will be disabled
  

Post-revocation changes:

• You will be required to use CDSL T-PIN or OTP-based e-DIS for every future transaction
  

• No actions will be permitted unless manually authorised by you
  

Modifying DDPI

Modifications may be needed when:

• Updating signatories (in case of joint or HUF accounts)
  

• Re-submitting documents due to technical errors or reactivation
  

• Changing broker or DP
  

How to modify DDPI:

• Fill out a fresh DDPI form with updated details
  

• Complete re-verification via Aadhaar OTP or wet signature
  

• Submit revised documents through online or offline channels
  

Processing time for revocation or modification typically ranges between 2–3 working days, depending on the platform.

DDPI is designed to simplify routine demat-related activities while preserving investor control over sensitive transactions. Its utility lies in automating actions that are frequently performed by active traders and long-term investors alike. However, it does not replace the need for explicit authorisation in scenarios that involve changes to core account or banking details. Understanding where DDPI applies can help investors streamline their trading operations while complying with SEBI’s regulatory expectations.

Common scenarios and applicability of DDPI:

By restricting DDPI usage to specific transaction types, SEBI ensures a balance between ease of use and protection against unauthorised activity.

While both DDPI and the CDSL T-PIN offer mechanisms to authorise demat transactions, they differ significantly in terms of control, security, and convenience. Understanding the distinction between the two can help investors choose the method that suits their trading behaviour and security preferences.

Key differences between DDPI and CDSL T-PIN:

While DDPI may suit investors who prefer faster settlements, CDSL T-PIN may be preferred by investors who want granular control over every transaction.

SEBI has issued detailed regulatory instructions to govern the use of DDPI, ensuring consistent practices across brokers and Depository Participants. These guidelines aim to balance efficiency with investor protection and provide a clear framework for implementation.

SEBI Guidelines on DDPI (As per Circular Dated 20 July 2022)

• DDPI is optional but highly encouraged for seamless trade execution
  

• Brokers are prohibited from offering PoA for new demat accounts from 18 November 2022
  

• A transparent audit trail must be maintained for all DDPI-linked actions
  

• Clients must be informed of their right to revoke DDPI at any time
  

These guidelines align with SEBI’s broader vision of promoting secure, investor-friendly market participation.

The Demat Debit and Pledge Instruction (DDPI) is a modern regulatory tool designed to simplify yet secure demat account operations. It replaces the traditional Power of Attorney with a safer, more transparent method of transaction authorisation. Investors who wish to avoid OTPs and manual approvals for each transaction can benefit greatly from this mechanism. With its clearly defined scope and easy revocation process, DDPI aligns with SEBI’s vision of a robust, investor-friendly capital market.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

• SEBI DDPI Circular (July 2022)
  

• CDSL FAQ on T-PIN
  

• Angel One - DDPI vs PoA
  

• Bajaj Finserv Markets - DDPI Guide
  

• India Infoline – DDPI Overview