Minor Demat Account: To buy and sell shares in India, Demat accounts are maintained by two primary entities, namely the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL). Today, there are many online platforms to create a Demat account: Zerodha Kite, Kotak Securities, and Groww. Additionally, Demat accounts can be opened by joint investors, corporate firms, and Non-Resident Indians (NRIs).

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Investing has always been a trend in India for a long time. There are parents who invest in the share market in the name of their children. For such a type of investing, they also need a Demat account in their minor child's name. The account will be operated by a guardian till the minor attains the age of 18. The guardian has to be the father or, in his absence, the mother. In the absence of both a father and a mother, the guardian can be appointed by a court.

A trading account can be opened in the name of the minor only for the sole purpose of the sale of securities that the minor has possessed by way of investment in an IPO, inheritance, corporate action, off-market transfers for gifting, donations, transfers between family members, and the implementation of government/regulatory directions or orders. Such an account will be operated by the natural guardian till the minor becomes a major.

Minor Demat account: Documents required

  • The documents required for opening the minor Demat account are- PAN card of his/her parent or guardian's address proof (Aadhar card of a minor, Aadhar card of the parent or guardian, ration card, etc.)
  • A copy of the minor’s birth certificate
  • Any proof of bank account details held in the name of the minor

What are the benefits of having a minor Demat account?

A minor Demat account allows parents/guardians to better plan their children's finances.

Hence, you can use this account to save for your children's higher education, wedding, relocation for jobs, etc. A minor Demat account introduces children to the world of financial independence. As they deeply involve themselves in the complexities of the stock market, they develop vital life skills necessary for navigating the world.

How to open a Demat account for minors

Step 1: The guardian must choose a depository participant (DP) with whom to open the account.
Step 2: Fill out an account opening form with the KYC details of both the guardian and the minor.
Step 3: They must submit the requisite documents to the DP along with a passport-sized photograph.
Step 4: In-person verification will take place later.
Step 5: The depository participant will provide the client ID and the account number.