Is POA mandotory for opening trading account with IndiaBulls?

POSTED BY surabhi Kumar ON December 10, 2010 10:32 am COMMENTS (8)

For opening a trading account with IndiaBulls, they are asking to fill the Power of Attorney form. Is the POA mandatory? If i sign on that, are there any possibilities of misuse? What will happen if i dont sign it?

8 replies on this article “Is POA mandotory for opening trading account with IndiaBulls?”

  1. Siva- IFA says:

    @Surabhi,

    Yes, give only specific PoA. But again, they won’t allow you to generate/frame the PoA. Because, its already framed by the brokers legal panel and would have been attached to your application. Just to make sure that it is not broker’s favor entirely, Read the content of the PoA till you understand very clearly. Since, it has more of legal framed words, its very difficult for us to understand at first time. But, don’t worry too much on this part. Everyone is making PoAs and broker’s also nailed very much. Only thing just read and understand the PoA, so that you will be in better position to argue in case of any suspicious malpractice.

    Above all, Keep watch your a/c and money transactions. Don’t keep idle money in brokers pool a/c. Transfer the funds time to time to your bank a/c when it is not required for trading. Because, during trading time instantaneously you can transfer the cash to your trading pool a/c. Check with the broker whether they have instant facility.

    Subscribe for SMS alerts while you fill up the forms. Because, both NSDL / CDSL used to send SMS alert for every DP transactions.

    Thanks – Siva

  2. Siva- IFA says:

    @Manish,

    Thanks for the compliment. If you had opened the ICICIDirect a/c 2/3 years back then am sure they would have taken your PoA in upfront. Because, recently SEBI ordered all brokerage houses not to hard press the customers to sign on PoA. Because, there are brokerage houses who had done trading on client’s a/c just to generate the brokerage.

    Yes, you are right, any time you may enter into PoA. But to be sure execute only specific PoAs for shares pay-out rather than generalized one. Ask the broker to give photocopies of your entire records. Right from application to PoA.

    Earlier, the brokers used to take generalized one and misused lot.

    Thanks – Siva

  3. Surabhi says:

    Siva,

    Even when we are giving POA, we should only give specific or limited POA ?

  4. Anand says:

    It’s part of the procedure. Go ahead and sign it. Even icicidirect asks for it. You are only giving them the power to transact on your behalf; you are not giving them right to your money.

    1. Anand

      Is it to be filled first time when we open the demat account ? Or is it done at some later stage , I opened it with ICICI DIrect , but not sure if I myself did it .

      Also , doesnt POA gives them the right to transact in behalf of you ?

      Manish

  5. Irshad says:

    If i remember correctly, I think its not mandatory to sign POA.

  6. Siva- IFA says:

    Hi Surabhi,

    Just ask them, whether the PoA is meant for Auto Demat Pay-Out?. The trading account works like this.

    See, Whenever you sell some shares from your trading a/c (Delivery based trade), you need to pay-out the shares to your Demat participant to meet your obligations. So,typically you need to fill up and submit the Delivery Instruction Slip physically with all equity, market and Clearing member details for the delivery based trades. Any delay in this may result into shares auction and inturn that could lead to a loss. Because for delivery based trades the payout period is T+2 Days and your shares have to be transfered to buyer within this period.

    In order to overcome this situation, the brokerage houses are asking for PoAs, as and when you carry out any Delivery Based transaction they will proceed with the shares pay-out on the same day from your demat a/c on your behalf. Because, they are your power agent to sign the delivery slips. Because at times it is not possible to carry the Delivery instruction slips with us all the times.

    If you are going to trade only in Margin then no need to execute PoA as you are not going to take deliveries.

    If you are a long term investor and wont churn your portfolio often then also decide which one is convenient to you …

    If you are a short term investor & often will do buy / sell, Will the manual process feasible to you ?

    More importantly Download this PoA Faq document published by NSE from below link and understand that: Then raise your questions with your broker and get it clarified.

    http://www.nseindia.com/content/assist/asst_faq_poa.pdf

    Have a nice day and Happy investing 🙂

    Thanks – Siva

    1. Very detailed and good reply from Siva 🙂 . 3 cheers !

      Manish

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