How to open demat or trading account for minors | Step-by-step guide

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Demat or trading account for minors: Since there is no specific age restriction for opening a demat account, it can be opened in a minor’s name by their parent or legal guardian. While the account is technically in the minor’s name, it is managed and operated by the parent or guardian until the minor reaches the legal age. Additionally, the minor cannot be a joint holder with the parent or guardian on the account.

A Demat account, short for dematerialisation account, is an account that holds financial securities in an electronic form. It serves as an alternative to holding physical share certificates. It makes the process of holding investments like shares, bonds, government securities, Mutual Funds, Insurance and ETFs easier, doing away with the hassles of physical handling and maintenance of paper shares and related documents.

Documents required for opening minor's demat account:

Guardian's Documents:

PAN Card of the parent.
Address proof of parent. One can submit Aadhar card, Passport, Driving license, Voter ID card or other documents as proof of address:
Recent passport-sized photographs of the parent.
Recent utility bills (electricity, water, gas, or landline telephone)

Minor's Documents:

Birth certificate of the minor specifying date of birth of minor and the name of the parents for relationship verification.
Recent passport-sized photographs of the minor.

Others

KYC documents are required for both the parent and the minor.

The bank account of the minor or parent is mandatory for seamless fund transfers.
The parent/guardian will need to sign declaration and consent forms affirming their role and responsibility for managing the Demat account on behalf of the minor.
If the guardian is not a natural parent, legal proof of guardianship may be required.

How to open a Demat account for a minor:

Choose a Depository Participant (DP): A Depository Participant is an agent of the depository who acts as an intermediary between the depository and the investor. There are several DPs in India, including banks and financial institutions. Choose a DP that suits your preferences.
Select the Right Type of Account: For a minor, a guardian needs to open a "Guardian Demat Account" on behalf of the minor. The guardian could be either a natural guardian (parent) or a court-appointed guardian.
Complete the Account Opening Form: Obtain the account opening form from the chosen DP. Fill out the form with accurate information. The form typically requires details of the minor and the guardian, along with KYC (Know Your Customer) documents.
Provide KYC Documents:
Submit the necessary KYC documents, which usually include identity proof and address proof for both the minor and the guardian. Common documents include Aadhar card, PAN card, passport, and utility bills.
Since the minor can't sign legal documents, the guardian will have to provide the minor's documents, such as birth certificate and photographs.
The guardian needs to submit their own KYC documents, including PAN card, Aadhar card, passport-sized photographs, and proof of address.
Sign the necessary declarations and consents required by the DP.
Submit the completed application form, along with all the required documents, to the chosen DP.
The DP will verify the provided documents. This may involve an in-person verification or may be done through video KYC, depending on the DP's policies.
Once the verification is complete, the DP will provide the Demat account details. You can then start using the account for trading and holding securities.