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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

A DP receives an account opening form from a client who also gives a power of attorney (POA) in favour of the DP's associated broker to operate the account. Which statement best describes the correct treatment under the regulatory framework?

Granting a power of attorney is voluntary. A DP cannot compel a client to grant a POA or make account opening conditional on it. Clients may choose to provide one for limited purposes, but it is never mandatory for opening a demat account.

  1. APOA is mandatory for opening any demat account
  2. BPOA is optional, the client cannot be forced to grant it, and the account opening cannot be made conditional on itCorrect
  3. CPOA must always be granted to the DP itself
  4. DPOA can be granted only for securities held in physical form

Explanation

SEBI requires that a DP must not make the opening of a demat account conditional on the client granting a POA. The client may voluntarily grant one, with specified purposes, but it is optional. So stating it is mandatory is wrong.

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