Demat Account Rules 2026: Nominees, DDPI vs POA, Pledging and BSDA
Last updated: 13 October 2026
Quick answer: DDPI vs POA: a Demat Debit and Pledge Instruction lets your broker debit shares only for four SEBI-defined purposes, while the old power of attorney was much broader. DDPI is optional; you can approve each sale with a TPIN and OTP instead. Pledged shares stay in your demat, you can name up to three nominees from 1 September 2026, and a basic demat account is free up to ₹4 lakh.
Last updated: 13 October 2026 Quick answer: DDPI vs POA: a Demat Debit and Pledge Instruction lets your broker debit shares only for four SEBI-defined purposes, while the old power of attorney was much broader. DDPI is optional; you can approve each sale with a TPIN and OTP instead. Pledged shares stay in your demat, you can name up to three nominees from 1 September 2026, and a basic demat account is free up to ₹4 lakh. Key takeaways DDPI: introduced by SEBI's circular of 4 April 2022; limited to sale settlement, margin pledges, exchange MF orders and open-offer tenders. Old POAs: remain valid until you revoke them, per SEBI's FAQs. Pledges: since 1 September 2020 margin collateral is a pledge in your own demat, approved by OTP. Nominees: up to 3 per demat; new single-holder accounts must nominate or opt out from 1 September 2026. BSDA: holdings up to ₹10 lakh; nil annual charge up to ₹4 lakh, ₹100 above that. Inactive: a trading account is flagged inactive after 24 months without activity. In 2019, a large broker, Karvy Stock Broking, was found to have used clients' power of attorney to move their shares into its own account and borrow against them. Thousands of investors whose only mistake was signing a standard account-opening form found their shares pledged without their knowledge. Most of SEBI's demat rules since then are a response to that episode. This guide explains, in plain language, the authorisations and settings attached to your demat account: DDPI vs POA, how margin pledging works, the nominee rules in force from 1 September 2026, the low-cost Basic Services Demat Account (BSDA) and what happens if your account goes inactive. Each section ends with what you should actually do. Who holds your shares: depository, DP and broker A demat account is an electronic account that holds your shares, ETFs, bonds and mutual fund units in dematerialised form. Two depositories keep the records: NSDL and CDSL. You do not deal with them directly. You open the account through a depository participant (DP), which is usually your broker or bank. Your trading account (with the broker) is separate from your demat account (with the DP), even when one company provides both. The trading account places orders; the demat account holds what you own. This distinction matters: a broker's trouble should not touch shares sitting in your demat, as long as nobody has the authority to move them out. That is why the debit authorisation is the most important setting on your account. DDPI vs POA: what is the difference? When you sell shares, they must be debited from your demat account and delivered to the clearing corporation. Someone has to authorise that debit. There are three ways to do it. The old power of attorney (POA) Until 2022, most brokers asked new clients to sign a power of attorney. SEBI's FAQs describe it as a document in the broker's favour that lets it operate the client's demat and bank accounts for specified purposes. In practice, the wording was often broad, and the Karvy case showed how it could be abused. DDPI: the narrower replacement SEBI's circular of 4 April 2022 (https://www.sebi.gov.in/legal/circulars/apr-2022/execution-of-demat-debit-and-pledge-instruction-ddpi-for-transfer-of-securities-towards-deliveries-settlement-obligations-and-pledging-re-pledging-of-securities_57546.html) created the Demat Debit and Pledge Instruction. A second circular in October 2022 widened it, and the depositories applied the wider scope from 18 November 2022, according to an NSDL circular (https://nsdl.co.in/downloadables/pdf/2022-164-Policy-Clarification_in_respect_of_Demat_Debit_and_Pledge_Instruction_(DDPI).pdf) . DDPI can be used for only four purposes: Transferring securities to settle shares you have sold on the exchange. Pledging and re-pledging securities for margin. Mutual fund transactions placed through stock exchange platforms. Tendering shares in open offers through the exchange. Anything outside this list, such as an off-market transfer to another person, cannot be done under DDPI. The third option: approve each debit yourself SEBI's FAQs on stock brokers (https://www.sebi.gov.in/sebi_data/faqfiles/sep-2024/1727418208774.pdf) state plainly that neither a POA nor a DDPI is mandatory. Without one, you authorise each sale through the depository's electronic system (CDSL's TPIN plus OTP, or NSDL's equivalent) or a physical delivery instruction slip. It adds roughly a minute when you sell. Comparison of DDPI vs POA vs TPIN authorisation for demat accounts in India Feature POA (pre-2022) DDPI TPIN / eDIS + OTP Scope Broad, wording varied by broker Four SEBI-defined purposes Only the debit you approve Mandatory? No No Default if no DDPI New ones accepted? No, replaced by DDPI Yes Yes Convenience on sale Automatic Automatic Extra step each time Who it suits Existing holders reviewing it Active traders, margin users Long-term investors, occasional sellers What to do: if you trade daily or use margin, DDPI is a sensible convenience. If you sell a few times a year, you may not need any standing authority. If you signed a POA years ago and no longer trade actively, consider revoking it through your broker. Existing POAs stay valid until revoked. How does a margin pledge work? A margin pledge lets you use shares or fund units you already own as collateral for trading, mostly in futures and options. Before 2020, brokers often moved client shares into their own "client beneficiary" accounts to raise margin. SEBI ended that with a circular of 25 February 2020, effective 1 September 2020. Under the current system, the securities stay in your demat account. A pledge is marked in favour of your broker, who re-pledges it to the clearing corporation. SEBI's FAQs confirm that title does not move and that you can see your collateral on the clearing corporation's website. Each pledge needs your approval through an OTP from the depository. Six steps showing how a margin pledge of shares works in a demat account Haircuts and the 50% cash rule Pledged shares do not count at full value. The clearing corporation applies a haircut based on the stock's volatility and liquidity. Large, liquid stocks usually attract smaller haircuts; small, illiquid ones much larger. If you pledge ₹1,00,000 of shares with a 20% haircut, you get ₹80,000 of margin. Exchanges also require that, broadly, at least half of the margin for derivative positions comes from cash or cash-equivalent collateral. Pledging shares alone may not be enough to run a large F&O position without extra cash. What you keep and what you risk You keep: ownership, dividends, bonus shares and split benefits, because only a lien is marked. You risk: if your positions lose money and you do not top up the margin, the broker can invoke the pledge and sell your shares, often at a bad moment. You can lose more than you pledged: derivative losses are not capped at the value of your collateral. Before pledging long-term holdings for trading, read our summary of what SEBI's F&O loss data shows (/insights/fno-trading-sebi-loss-study) . A margin pledge is also different from a loan against securities from a bank or NBFC, which our comparison of personal loans, loans against mutual funds and gold loans (/insights/personal-loan-vs-lamf-vs-gold-loan) covers. Where your cash sits: running account settlement Brokers may hold unused funds in your trading account only within limits. Per SEBI's FAQs, clients who opt for running account settlement are settled on the first Friday of each quarter (January, April, July, October) or each month, depending on the choice made. If you have not traded for 30 calendar days and have a credit balance, the broker must return it within three working days. Demat nominee rules from 1 September 2026 SEBI overhauled nomination rules again with a circular of 29 May 2026, effective 1 September 2026. The headline changes for demat accounts: Up to three nominees per demat account, down from ten under the January 2025 framework. Nominate or opt out: new single-holder accounts opened from 1 September 2026 must carry a nomination or a formal opt-out declaration. Simpler details: the nominee's name and relationship are the key mandatory fields. Nomination makes transmission after death far quicker. Remember that a nominee receives the shares, but under Indian succession law may hold them on behalf of the legal heirs. Our detailed guides cover the 2026 nomination rules for mutual funds and demat (/insights/nomination-rules-mutual-funds-demat-2026) and the difference between a nominee and a legal heir (/insights/nominee-vs-legal-heir-india) . What to do: log in to your DP or check your CDSL or NSDL statement to confirm the nominee status. If you hold shares jointly, decide whether nomination still adds value; on the death of one holder, the shares pass to the survivors first. What is a Basic Services Demat Account (BSDA)? A BSDA is a low-cost demat account for small investors. SEBI enlarged it in June 2024, effective 1 September 2024. As reported by Outlook Money (https://www.outlookmoney.com/equity/sebi-raises-limit-for-basic-service-demat-account-to-rs-10-lakh-reviews-amc) , the rules are: Eligibility: an individual with only one demat account as sole or first holder, and only one BSDA across both depositories. Holding limit: debt and non-debt securities together worth up to ₹10 lakh at any time (earlier ₹2 lakh each). Annual maintenance charge: nil up to ₹4 lakh; ₹100 from ₹4 lakh to ₹10 lakh. Statements: electronic statements free; physical statements ₹25 each. Above ₹10 lakh: the account converts automatically into a regular demat account. BSDA basic services demat account limit of ₹10 lakh with nil charges up to ₹4 lakh Regular demat accounts carry an annual maintenance charge set by each DP, so for a beginner with ₹2 lakh in shares and ETFs, a nil-charge BSDA saves a real slice of the portfolio's yearly return. If you are starting out, our guide to first salary investing (/insights/first-salary-first-investment-pune) covers what to do before buying stocks. What to do: if you hold under ₹10 lakh in one demat account, ask your DP whether you are on BSDA. Many DPs check eligibility, but it is worth confirming. What happens to an inactive trading or demat account? Exchanges define an inactive trading account through circulars such as NSE's circular of 25 October 2024 (https://nsearchives.nseindia.com/content/circulars/INSP64718.pdf) . A trading account becomes inactive if, for 24 months through that broker, you have not done any of the following: Traded, or taken part in an OFS, buyback or open offer. Made a successful IPO application, or bought an SGB or mutual fund through the broker, including SIP instalments. Updated your email, mobile number or address in the KYC record, validated at the KRA. Once flagged, you cannot trade until you reactivate. Reactivation needs an in-person or video verification and confirmation of your current details; if your KRA status is not validated, the broker must update it first. The 24-month clock then restarts. Unused cash in the account is returned under the running account settlement rules. Your shares are not lost. Inactivity is a status on the trading account, not on ownership. The holdings remain in your demat account at NSDL or CDSL, and dividends keep arriving in your bank account. Many DPs also apply extra checks before allowing a debit from a demat account that has been dormant for a long time; the exact policy varies by DP, so check yours. If you have lost track of an old account entirely, consolidate it. Our guide on consolidating scattered investments (/insights/consolidate-scattered-investments-and-policies) and the one on reading your CAS (/insights/consolidated-account-statement-cas-guide) show how to find every account linked to your PAN. Checklist for an annual demat account review: nominees, DDPI or POA, pledges, accounts, contact details and BSDA Step by step: how to review your demat settings today Download your CAS from NSDL or CDSL to see every demat account linked to your PAN. Check authorisations: ask each broker whether a POA or DDPI is on record. Revoke what you do not need. Look for pledges: your depository statement shows pledged holdings. Any pledge you do not recognise is a red flag; raise it immediately. Update nominees: up to three, with each nominee's share specified, or record an opt-out. Close extra accounts: transfer holdings to one main account, then close the rest to cut charges and risk. Ask about BSDA if your holdings are under ₹10 lakh. Related reading Nomination Rules for Mutual Funds and Demat in 2026 (/insights/nomination-rules-mutual-funds-demat-2026) Claiming a Parent's Investments After Death (/insights/claim-deceased-parent-investments-checklist) How to Read Quarterly Results (/insights/how-to-read-quarterly-results) How to Apply for an IPO via UPI (/insights/how-to-apply-ipo-upi-asba-allotment) Direct Equity Investing: Taxation and Costs (/insights/direct-equity-investing-india-taxation-guide) Frequently Asked Questions Is DDPI mandatory for selling shares? No. SEBI's FAQs state that DDPI is not mandatory. Without it, you approve each sale yourself through the depository's electronic authorisation (for example CDSL's TPIN and OTP) or a delivery instruction slip. DDPI simply saves that step for each sale. A broker should not refuse to open your account only because you decline DDPI. Is my old power of attorney still valid? Yes. Brokers stopped taking new POAs when DDPI arrived in November 2022, but SEBI's FAQs say existing POAs remain valid until you revoke them. If you no longer trade often, or you are not sure what the POA allows, ask your broker to revoke it and switch to DDPI or per-trade authorisation. Do I get dividends on pledged shares? Yes. A margin pledge only marks a lien on the shares in your own demat account; ownership does not change. Dividends, bonus shares and split adjustments continue to reach you. The risk is that if you fail to meet a margin call, the broker can invoke the pledge and sell the shares to cover the shortfall. How many nominees can I add to a demat account? Under SEBI's circular of 29 May 2026, effective 1 September 2026, you can name up to three nominees per demat account. New single-holder accounts opened from that date must either have a nomination or a formal opt-out. Earlier frameworks allowed up to ten, so check how your existing nomination is recorded. What is the BSDA limit in 2026? A Basic Services Demat Account can hold debt and non-debt securities worth up to ₹10 lakh combined. There is no annual maintenance charge up to ₹4 lakh and ₹100 a year between ₹4 lakh and ₹10 lakh. You must have only one demat account as sole or first holder. Above ₹10 lakh it converts into a regular account. Will my shares be lost if my account becomes inactive? No. An inactive flag stops trading through that broker until you reactivate with a fresh verification, but your shares stay in your demat account and dividends keep coming. A trading account is flagged after 24 months with no trades or other specified activity. Reactivate it, or transfer the holdings to an account you use. Can a broker sell my shares without my permission? Only within what you have authorised. Under DDPI, the broker can debit shares for settling sales you made and for margin pledges you approved. If you have pledged shares and fail to meet a margin call, the broker can sell them. Any debit you did not authorise should be reported to the broker, the depository and SEBI SCORES. Sources: SEBI DDPI circular, 4 Apr 2022 (https://www.sebi.gov.in/legal/circulars/apr-2022/execution-of-demat-debit-and-pledge-instruction-ddpi-for-transfer-of-securities-towards-deliveries-settlement-obligations-and-pledging-re-pledging-of-securities_57546.html) ; NSDL circular on DDPI scope, 23 Nov 2022 (https://nsdl.co.in/downloadables/pdf/2022-164-Policy-Clarification_in_respect_of_Demat_Debit_and_Pledge_Instruction_(DDPI).pdf) ; SEBI FAQs on stock brokers (https://www.sebi.gov.in/sebi_data/faqfiles/sep-2024/1727418208774.pdf) ; SEBI nomination circular, 29 May 2026 (https://www.sebi.gov.in/legal/circulars/may-2026/ease-of-doing-investments-modified-norms-for-nomination-in-demat-accounts-and-mutual-fund-folios_101703.html) ; Outlook Money on BSDA changes (https://www.outlookmoney.com/equity/sebi-raises-limit-for-basic-service-demat-account-to-rs-10-lakh-reviews-amc) ; NSE circular on inactive trading accounts, 25 Oct 2024 (https://nsearchives.nseindia.com/content/circulars/INSP64718.pdf) . Worked examples are Money n Wealth calculations. Not sure what your demat and broker accounts are authorised to do? A quick review of nominations, authorisations and scattered accounts can prevent problems for you and your family later. Talk to Money n Wealth (/contact) for a free portfolio review. This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
Is DDPI mandatory for selling shares?
No. SEBI's FAQs state that DDPI is not mandatory. Without it, you approve each sale yourself through the depository's electronic authorisation (for example CDSL's TPIN and OTP) or a delivery instruction slip. DDPI simply saves that step for each sale. A broker should not refuse to open your account only because you decline DDPI.
Is my old power of attorney still valid?
Yes. Brokers stopped taking new POAs when DDPI arrived in November 2022, but SEBI's FAQs say existing POAs remain valid until you revoke them. If you no longer trade often, or you are not sure what the POA allows, ask your broker to revoke it and switch to DDPI or per-trade authorisation.
Do I get dividends on pledged shares?
Yes. A margin pledge only marks a lien on the shares in your own demat account; ownership does not change. Dividends, bonus shares and split adjustments continue to reach you. The risk is that if you fail to meet a margin call, the broker can invoke the pledge and sell the shares to cover the shortfall.
How many nominees can I add to a demat account?
Under SEBI's circular of 29 May 2026, effective 1 September 2026, you can name up to three nominees per demat account. New single-holder accounts opened from that date must either have a nomination or a formal opt-out. Earlier frameworks allowed up to ten, so check how your existing nomination is recorded.
What is the BSDA limit in 2026?
A Basic Services Demat Account can hold debt and non-debt securities worth up to ₹10 lakh combined. There is no annual maintenance charge up to ₹4 lakh and ₹100 a year between ₹4 lakh and ₹10 lakh. You must have only one demat account as sole or first holder. Above ₹10 lakh it converts into a regular account.
Will my shares be lost if my account becomes inactive?
No. An inactive flag stops trading through that broker until you reactivate with a fresh verification, but your shares stay in your demat account and dividends keep coming. A trading account is flagged after 24 months with no trades or other specified activity. Reactivate it, or transfer the holdings to an account you use.
Can a broker sell my shares without my permission?
Only within what you have authorised. Under DDPI, the broker can debit shares for settling sales you made and for margin pledges you approved. If you have pledged shares and fail to meet a margin call, the broker can sell them. Any debit you did not authorise should be reported to the broker, the depository and SEBI SCORES.
Not sure what your demat and broker accounts are authorised to do?
A quick review of nominations, authorisations and scattered accounts can prevent problems for you and your family later. Talk to Money n Wealth for a free portfolio review.
