Last Updated: Mar 21, 2024 Value Broking 7 Mins 1.7K

A minor Demat account is a Demat account opened in the name of a minor. Any individual below 18 years is considered a minor in India. A few restrictions on these Demat accounts must be kept in mind.

Trading is limited to equity – The account will have strict limitations to reading with equity and shares. Financial derivatives like futures and options cannot get bought or sold using a Demat Account for a minor. Parents or guardians cannot use this Demat account to do intraday trading as it is associated with higher levels of volatility. 

No trading account in the minor’s name – You can only open a Demat account for a minor’s name. The law does not allow us to open a trading account with the minor’s name. The trading must get done through a different account associated with the guardian. 

There are no joint accounts in the minor’s name – adults and minors have different registration processes and regulations for their Demat Accounts. A minor cannot become the joint holder of an adult’s Demat account.

How to Create a Demat Account for a Minor in India?

Opening a Demat account for a minor is a reasonably straightforward process. As children cannot engage in contracts independently, only an authorized guardian, such as their parent, can create an account for them.

Even though the child’s information gets stored in the Demat account, the guardian is the one who signs all papers on the child’s behalf. Furthermore, the guardian is responsible for providing all required papers for both the guardian and the child. The documents needed by both the guardian and the child are given below. 

Once the depository participant (DP) receives all necessary papers and information, the DP will analyze and validate the details. A Demat account can only be opened for minors after satisfactory verification by the DP.

Documents Required for a Minor Demat Account Opening

Whether you want a minor Demat account opened online or offline, you must submit the necessary documents. 

There is an Indian Contracts Act, 1872 that a minor cannot be a part of any contract or agreement, but the Companies Act of 2013 makes it legal for a person of any age to hold company shares. For this type of trading, which gets done by using a minor’s name, the following documents get needed by the depositories to open a minor Demat account: 

Account Application Form

An application form and two KYCs are essential to open a Demat account for minors. One KYC is for the guardian who has personal details, bank account details, and an annual salary range of the individual. The other KYC is for the minor. All documents will contain the guardian’s signature. 

Identity Proof

It will include-

  • PAN Card of the guardian as well as the minor.
  • Any other ID Proof, like Aadhaar Card, Passport, Voting Card, Driving License of the guardian and the minor.

Address Proof

This may include – Aadhaar Card/ Ration Card/ Utility bills, etc. 

Birth Proof

The minor’s birth certificate is a must, proving his date of birth.

Bank Account Details

There is no requirement for a separate bank account for the minor. You can provide the details of the guardian’s bank account where the minor is a joint holder. 

In case of the death of the minor’s guardian, the Demat account will get frozen for the time being. A new guardian will have to complete a new KYC form with the relevant documents and the prior guardian’s original death certificate. 

Reasons for Opening the Demat Account

A guardian must provide the bank with a reason for opening a Demat account in the name of a minor. 

The reason must be submitted to the bank in writing or in an email to the relevant bank or broker. These reasons may include:

  • The transfer formalities while investing and trading through a minor Dematerialized account are less time-consuming.
  • It provides a platform for early financial planning of your child’s future. It can be for any purpose, such as – medical, education, marriage, etc. 

These heavy expenses become a load on parents later in life. But, by using a minor dematerialized account, you can start safeguarding and planning your child’s future. Being a different account draws a line between your other and your child’s expenses.  

  • You can use these accounts for long-term investments that come out to be fruitful in the child’s future. You can start mutual funds, invest IPOs, and profit from their results. It will also work as a lesson for your child, who will know about investment and trading at a young age. Due to this, they will also try to grow their expenses.

Benefits of a Minor Demat Account:

Early Financial Education: A minor demat account introduces children and teenagers to the world of investing and finance at a young age, promoting financial literacy and responsibility.

Long-Term Investment Opportunities: Opening a demat account early allows minors to invest in stocks, mutual funds, and other securities, providing them with the advantage of long-term wealth accumulation.

Parental Control: Parents or guardians control the minor demat account, ensuring responsible and supervised investment decisions until the child reaches the legal age of majority.

Tax Benefits: Minors can avail of tax benefits on capital gains and dividends earned through their investments, potentially reducing their tax liability.

Secure Investment Platform: Demat accounts provide a safe and regulated investment environment, protecting minors’ assets and preventing fraudulent activities.

Learn Risk Management: Minors can understand the concept of risk and reward through demo trading or by investing with a smaller portion of funds, helping them learn valuable risk management skills.

Higher Returns on Investments: With time, minors can take advantage of compounding returns and enjoy the benefits of investment growth over the long run.

College and Future Expenses: Minors can use the accumulated funds for higher education or future financial needs, reducing the burden on parents or guardians.

Asset Diversification: By investing in a demat account, minors can diversify their portfolio across different asset classes, mitigating risk and potentially enhancing returns.

Inculcate Financial Discipline: Managing investments in a demat account instills financial discipline, planning, and patience in minors, fostering a responsible approach towards money matters.

Restrictions Imposed on a Minor Dematerialized Account

  • Compared to standard Demat accounts, minor Dematerialized accounts are subject to additional limitations. Here’s a quick look at some of them.
  • Minor Dematerialized accounts are not permitted to trade in specific categories, intraday, and derivatives such as futures and options.
  • Minor Dematerialized accounts can only function in the equities delivery section.
  • Minor Dematerialized accounts cannot get linked to trading accounts.

What Happens With the Account When the Minor Turns 18?

When a minor with a Demat account reaches 18, they must provide the depository participant with a fresh set of Know-Your-Customer (KYC) papers and a correctly completed KYC form with their signature to the DP. In addition to these papers, the minor would need to submit a properly completed new account opening form.

The DP would analyze and verify the details provided in the following documents once they were received. Following successful verification, the DP would delete the guardian’s information and replace it with the minor’s.


It is efficient to use a minor dematerialized account for your child’s growth in terms of finance. The funds collected over these years by investment and trading can be used for their future financial planning, making their path safe and secure. It will also have the child’s advantage to be aware of the importance of savings and investments. The whole procedure is straightforward and comfortable and can get done within some days. It will result in your child growing up with a Demat account and a wealth that they can grow and manage according to their needs and requirements.