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TPIN and OTP Based Verification for Selling Stocks

  • Akshatha Sajumon
  • 28 Dec
  • 6 minutes

Securities & Exchange Board of India (SEBI) had recently instructed depositories (CDSL) in the country to introduce changes with regard to the existing eDIS (electronic delivery instruction slip) process. As per the changes introduced, investors have to perform a two-factor authorization for any stock sale to be executed. 

The new authorization technique will include a TPIN for validating a user’s Demat account on CDSL. It will also require an OTP verification for authorising any stock sell transactions. While this is expected to increase a user’s sell time, it is intended towards safeguarding stock market customers against any misuse of authorisations. This change is expected to go live by 20th of Feb, 2022 being a deadline set by SEBI.

How did the CDSL TPIN replace POA?

These days, trading in the stock market can only be done if one has a trading and a demat account. When a user opens a demat account with a brokerage firm, he/she is authorized to place buy and sell orders at BSE and NSE. These accounts are registered with the CDSL. 

When a user places a buy order for stocks, the brokerage firm receives those shares in virtual format on the user’s behalf, which are then transferred to the user’s demat account. With the digitisation of equity trading, investors were not sure how the buying and selling of stocks can be done online without any security element. Therefore, brokerage firms set up a security cover called POA or Power of Attorney. This is a document to be used by investors for authorising broking houses to sell stocks on their behalf.

However, one of the flaws of POA is that it cannot be digitally signed as per the IT Act. Thus, even if the entire process of setting up a demat account is online, one has to physically sign a POA to sell transaction authorization. Upon signing, an investor was also required to send a document to the broking house before selling the stocks. 

To improve investor experience and ensure a secure end-to-end process, POA was eliminated and replaced by TPIN. It allows better control over one’s demat accounts and also makes the process more reliable.

Why is authorisation needed for sale transactions?

Whenever an investor sells stocks, the brokerage platform or broker debits such shares from the seller’s Demat account. Earlier, investors wanting to sell stocks had to physically sign a power of attorney and furnish it to the broker before the sell of stocks can be executed. This has been replaced by the OTP verification or authorization process.

This is expected to help ensure safety of the stocks held by investors as the stocks can be sold only if the TPIN + OTP is entered. Customers who wish to sell their stocks without submitting a signed POA can do so by authorising such transactions using the CDSL facilitated TPIN + OTP option.

How will the stock sale transactions change with the new system?

Every stock market investor has a unique TPIN assigned by CDSL. This is a unique pin that remains constant for all transactions and acts like a passcode. Here is how the new mechanism will work:

  • After the introduction of the new verification method, any sell transaction will require users to enter a TPIN to further be taken to the CDSL page.
  • A TPIN can be generated through the app or website being used by the user. Upon requesting, a TPIN is sent to the user’s mobile and email id as per CDSL records. 
  • After a user enters the correct TPIN, he/she can see the list of stocks that are being sold and the user will further be required to authorise the sell transactions through an OTP sent by CSDL to registered mobile and email id.
  • After successfully authenticating with an OTP, one can proceed with the stock sell order.

Did you know?

If you forget your TPIN or lose it at any point, you can now have the option of setting your own TPIN. Earlier, you would have to request it from CDSL. However, now you can have the convenience of setting one yourself at any time. 

How to set your own TPIN?

Here are the steps to be followed for setting TPIN:

  • Select the reset TPIN option
  • Provide the Demat account number along with PAN number
  • Enter the OTP sent to registered mobile and email by CDSL 
  • Choose and enter a 6 Digit TPIN of choice and ensure to remember for future use


Central Depository Services Limited (CDSL) has constantly aimed towards digitising all activities associated with demat accounts, one of which is the introduction of TPIN. The CDSL TPIN aims to improve security of users as it enables them to authorise every virtual action surrounding their accounts. This acts as an extra layer of protection for demat accounts being operated virtually. 


What is CDSL?

CDSL is short for Central Depository Services Limited. It is an Indian securities depository establishment that holds securities such as shares, bonds, etc., in an electronic format.

What is the validity period of TPIN?

After verification, TPIN can be used for approval for 1 day from the time of verification. Upon expiration, one has to verify holdings before selling stocks.

Does TPIN verification result in order delays?

TPIN verification can be done in advance of placing a sell order in order to ensure that it does not result in order delays.

Do intraday orders require TPIN?

Since intraday orders do not involve stock delivery in an investor’s Demat account, there is no need to use TPIN in such orders.

Do long-term investors who don’t wish to sell their shares in the near future need to verify TPIN?

It is ideal to verify TPIN at the earliest, irrespective of whether one is a short-term or long-term investor. This helps in ensuring that a potential sell order is not cancelled.

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Akshatha Sajumon