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Stock market trading is an important place for each trader. So, it is mandatory to have a preset protocol while selling your holding to avoid unauthorised access and other factors that can harm the finance holding of a trader. To make things clear, we need to have a safety protocol to avoid any wrong sell order or manipulation in your Demat account. To end this problem, the depository of India came up with the Central Depository Services Limited Transaction Personal Identification Number (CDSL TPIN). The CDSL TPIN makes the process of transferring securities simple and secure. Read on to know what TPIN is and why it is used.
Table of Contents
What is TPIN?
The CDSL TPIN is a six-digit password that authorises a broker to withdraw shares from the customer’s Demat account. This authorisation is valid for one day for the selected stock.
This CDSL TPIN was introduced to us in the year 2020 as an alternative to the Power of Attorney (POA) handed to the broker. However, with the introduction of the TPIN, customers no longer need to take the trouble of signing the POA to trade online, which was mandatory earlier.
Let’s learn a bit about CDSL. It is one of the two government-approved depositories available in India. CDSL offers a Demat account and securities server for your Demat account. It works as the safety deposit provider for the stockholders. The stockbrokers are CDSL members as the depository participants (DP).
The CDSL issues the TPIN directly to the customer. It also provides a facility to reset the TPIN online through the OTP verification process.
Why Do Traders Need a CDSL TPIN?
For trading in the Indian stock market, you need to have a Demat and a trading account. If you open both accounts from a stockbroker like Share India, then you can trade with the leverage of advanced technology. When you open a Demat account from any other depository, such as CDSL, then you are ready to buy or sell share orders from your Demat account. You can trade in both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) markets. Your registered Demat account is used to place an order to buy the stocks, and your brokerage firm will receive these shares virtually on your behalf. Furthermore, your brokerage firm will receive these shares virtually, and then they will be added to your Demat account. To make this process one step better and more secure, there was something known as the POA.
The POA is a power of attorney, which is a document used to give authority or the rights to the broking company to sell your stocks. However, there was a drawback with the POA system. The problem was that you could not sign digitally as per the Information Technology (IT) Act, which was problematic as the whole process of opening a Demat account requires an e-sign to an Aadhaar card and other documents online. Here, the signing of the POA requires a physical sign. After signing a POA form that you got from your broker, you also need to send this form to the broker house for the verification process. So, the whole process of physically signing and drafting the form was lengthy and unworthy.
To improve these processes and make them simple and secure, the POA was removed, and the TPIN was introduced. It not only gives you more control over your trading, but it can let you authorise each transaction. With this security protocol, you can trade in a reliable environment.
With the CDSL TPIN, you can now sell and buy securities without any hassle. No stock brokers can tamper with it. However, all the stock brokers use CDSL as a third-party service in their trading software. So whenever you wish to sell securities or get the ‘authorise now’ button, you can click on it, which will redirect you to the CDSL portal. You have to enter the CDSL TPIN here. You can use this pin again when selling the securities.
You need to have the TPIN in the following scenarios:
- Modifying the sell order for delivery trading
- Receiving the margin benefits on your stocks
- Modifying a sell order to get your intraday shares into your delivery account
You also need to remember that the TPIN is for user security and to let investors sell their shares from the app or website.
How to Use TPIN for Selling Shares?
Now that we know what TPIN is, let us learn how to sell shares from your Demat account. You need to follow the process mentioned below:
- Log in to your online trading account, which you have registered with your Demat account.
- If you have any securities to sell, you can even place a sell order on your Demat account. Once you submit the sell order, it will reflect as pending for execution.
- You will receive a TPIN authorisation request via SMS/email from CDSL.
- Open the link received and enter your CDSL Demat account number.
- Enter the 6-digit TPIN you generated earlier. You can submit the OTP received on your registered mobile number.
- The authorisation will be completed, and the pending sell order will be executed.
The sold shares will be debited from your Demat account, and the funds will be reflected in your linked bank account as per the settlement cycle of your trading account. You can check the Demat account activity from your stock broker platform.
How to Generate CDSL TPIN?
Generating the CDSL TPIN is a mandatory process for every trader to perform stock trading in India. In order to get the TPIN for your Demat account, you first need to open a Demat account. And if you want to sell shares, you need to generate a TPIN. As we have covered the meaning of TPIN, let’s learn how to generate CDSL TPIN. You need to follow the steps given below:
- Link the profile that will take you to the CDSL portal to generate the TPIN.
- Here, there will be two fields: the first one is the Beneficiary Owner Identification Number (BO ID), and the other is the PAN. You need to enter your 16-digit Demat account number in the BO ID field and then your PAN number in the PAN field.
- After entering both pieces of information, the other screen will appear, which will ask for the OTP. You will receive an OTP on your registered mobile number and email ID.
- If the above step is completed successfully, the TPIN will be generated and sent to your registered mobile number and email ID. Now, you can use this TPIN as an authorisation key for validating any sales from your Demat account.
You can simply map your TPIN in just 6 minutes from your stock broker app or website. You also need to make sure not to share the TPIN with anyone and keep it confidential. You can reset or regenerate the TPIN online by logging into your CDSL account.
How to Change TPIN?
To change your TPIN, you need to go directly to the CDSL website. Here, you need to perform the following:
- Visit the CDSL website, which is https://edis.cdslindia.com/HOME/ChangePin
- Now enter your BO ID and PAN number, then click ‘Next’.
- You will get an OTP on your mobile phone from CDSL using your registered mobile number and email ID.
- After entering the OTP, you can generate a TPIN, which takes around 6 minutes to activate.
- If you forget the CDSL TPIN link in the authorisation screen, it will not work during market hours, which are around 8:00 a.m. and 4:00 p.m.
Benefits of Having a CDSL TPIN
Some of the benefits of having an extra layer of security in online trade are as follows:
- You get paperless security measures from the CDSL TPIN.
- There is no need for the POA process, which used to be time-consuming.
- Every time you withdraw a share, you need to verify your TPIN.
- The CDSL TPIN gives better control over the authorisation of transactions.
- No interference from the broker while selling the shares or other securities.
- TPIN can be generated instantly and used anytime, anywhere, for online transactions through CDSL e-services, saving time and effort.
- Online transactions reduce the execution time as the process is automated without manual processing.
- This authentication factor can save the courier/postage charges that would be required for physical delivery instruction slips (DIS).
Conclusion
The CDSL offers a digital Demat account where you can trade, store, and manage your financial securities. To make this process secure and encrypted, we can use the TPIN feature and make each transaction safe from any misuse. With the CDSL TPIN authorisation, an investor Demat account transaction can be carried out with maximum security.
Eliminating the POA or the power of attorney step in the Demat account was a good step. The POA process provides a broker the right to sell your holdings on your behalf, which could lead to problems such as misuse or error. Furthermore, if you’re interested in understanding how to transfer shares from one Demat account to another while ensuring maximum security and efficiency, Share India offers valuable insights and resources to simplify the process for investors.