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Benefits of Power of Attorney
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Benefits of Power of AttorneyEvery trader during the process of opening a demat account is liable to sign a Power of Attorney (POA). Such intricate named documents can result in rise of many questions and confusions at the investors’ end as to why such complex documents need to be signed prior to opening of a demat account. While the procedure of signing the Power of Attorney is not mandatory, the benefits are plenty. This simple procedure makes your investing in shares hassle free, as you would also agree by the end of this blog.

During the purchase of shares, in an online or offline mode, the shares are automatically moved to your demat account. It is at the time of sale or pledging of shares that the transaction is moving out of your demat account and hence in such a transaction a POA is required for all online processes.

In the offline approach, the conventional method would require the investor to send a delivery instruction (DI) slip to the brokers office directing a debit transaction of shares from the demat account. On receiving the slip the broker would execute the instruction and debit the demat account. However this conventional method poses many drawbacks: Increased expenses (courier/transport costs made for physical delivery of slips), Risk of auction (in case of delay in slip delivery, risk of auction penalty) and most of all, unnecessary wastage of paper when an online, faster option is available.

With the advance in online broking the physical method is not practical anymore. The concept of POA allows easy operation of your demat account. The POA authorizes the broker to debit shares from your demat account each time that you sell shares. POA is also utilized to debit shares from your demat account when you intend to pledge the shares to get collateral margin for trading futures and options. The POA is not required while trading futures and options or intraday equity trading.

The apprehensions that you may have as an investor with any misdoings related to a POA are merely apprehensions. The POA being signed here would be specific to release of shares into and out of your DEMAT account. The process only enables for quicker and more efficient transfer of shares, pledging of shares when the requirement arises and saving on your auction penalties if at all they arise.

In case you are still worried about the repercussions of executing a POA, please feel free to contact our help desk on +91-120- 6826800 or email us your queries on helpdesk@adroitfinancial.com and we would be more than happy to help clear any doubts that you may have.

Benefits of Power of Attorney

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