In May 2020, the depositories introduced a new process for clients to authorise the debit of securities from their demat accounts against a delivery sale transaction by entering a TPIN. The new process made a physical Power of Attorney for the demat account, in favour of the broker, unnecessary, thus making the account opening and operating process simpler and more secure.
SEBI has now advised the depositories to further strengthen this process by mandating an OTP at the time of authorisation in addition to the existing TPIN. All brokers have been asked to take this process live from Saturday, February 20, 2021 as per this circular by CDSL. As such, the following changes will be effected for all non PoA accounts:
- In addition to TPIN, an OTP will have to be entered at the time of authorising the stocks for debit. The OTP will be sent by CDSL to your registered email address and mobile number.
- Up until now, the authorisation remained valid for 90 days, which meant that once the stocks were authorized for debit, you needn’t authorise the same stocks (by visiting the CDSL website) for the next 90 days. From February 20, 2021, the authorisation shall stay valid for one trading day only. This means that each day you intend to sell a stock, you’ll be redirected to CDSL’s webpage where you’ll need to enter the TPIN and OTP in order to authorise the debit.In the event that CDSL isn’t able to send OTP for any reason, you can still carry out the sale transaction. You will be required to authorise the debit of the sale transaction after carrying out the trade before 5:00 PM on the day of the trade. To do so, you’ll have to click on the ‘Authorisation’ button on the Holdings page on Kite. If you do not authorise the debit after carrying out the sale, the transaction will result in short delivery and subsequent auction and penalty. You can read more about the auction process here.
- Impact on GTT and equity SIP sell orders: Since the new process requires an OTP for the transaction to be completed successfully, you’ll need to authorise all your holdings for debit with TPIN and OTP each morning. This is a temporary solution and we’ll switch to post-trade authorisation for GTT and SIP sell orders soon.
Note: You will have to authorise your stocks with OTP again even if you have previously authorised the sale of stocks with just TPIN from February 20, 2021.
While we do understand that the new process may seem cumbersome in some aspects, please keep in mind that these changes have been suggested by SEBI with the interest of keeping your investments secure. In light of these changes, it would also be prudent for you to have your latest, and active, mobile number and email address registered with CDSL. If you have changed your number or email ID and haven’t updated it with us, please do so at the earliest on Console to be able to receive the OTP required to authorise the sale of stocks.