What is Power of Attorney (POA)? Why is it needed for my demat account?

A power of attorney (POA) is a legal document that lets someone else manage your finances, investments, property, or other matters for you. This person, called an attorney-in-fact, can have full or limited authority based on your instructions, like handling your demat account.

When it comes to trading or investing, a POA  makes managing your demat account smooth. When you sell shares, your broker uses the POA to transfer them from your account to the exchange. It also comes in handy when you want to pledge shares for collateral margin in trading futures and options.

Is a POA compulsory?
No, having a POA is not mandatory for operating your trading and demat account, but it does make managing your account easier. Just keep in mind that it's only needed for the demat account. 

When is a POA used?

You don't need a POA for trading futures, options, or intraday equity. However, if you're selling shares from your demat account or pledging them for margin in F&O trading, the POA is essential. It allows the shares to be debited from your account, making the process smoother and fully online.