When you sell shares during market hours, the shares are debited from your (sellers) account to deliver to the buyer. Your broker needs the Power of Attorney (POA) to debit these shares from your demat account.
There is one more way to sell the shares from your DEMAT for an account without submitting the POA. You can use CDSL TPIN to place the sell order.
POA document gives your broker the authorization to automatically debit shares from your demat account whenever you sell them on the app.
If your broker does not have a POA, you have to follow a lengthy process each time you try selling any share -
Sadly the authorization you do above is only valid for one day. This means you have to follow the above process every time you want to sell a share on a new day.
Some brokers used to do shady things with POA, which is why SEBI came up with the above process while selling. Pledging of your shares without your permission was one such thing.
So you should provide POA to your broker only if you trust them completely.
<aside> ❔ Why can't I send a soft copy of POA?
Somehow these guys need your sign in original on the POA, maybe they want to avoid a legal issue later. So they have made sending a hard copy mandatory.
The process of doing POA differs a bit across brokers. Click below to know the step-by-step process as per your broker -