How to open a Minor Demat Account for Children in India?

A minor Demat account is an account opened by a parent, or a legal guardian, in the name of a minor. In India, a minor is defined as an individual below 18 years of age.

A minor Demat account for their children can help parents solve a lot of problems in one stroke. Below are some of the problems that a minor Demat account can help solve:

Planning your child’s future expenses:

A parent is beset by many expenses from all sides. From medical expenses for your toddler to their pre-school fees, you may constantly need to juggle your finances. Parents also need to prepare finances for their child’s higher education and their wedding. However, it can become difficult to develop an alternate corpus for your children that is separate from other funds. A minor Demat account helps you draw a clean line around the funds which are only meant for your children’s education, wedding funds, relocation for jobs, and other expenses.

Financial literacy for your kids:

Reports have found that financial literacy rates in India, at a bare 24% of the total population, is very low compared to the rest of the world. Having a Demat account registered in your child’s name will help them understand the basics of savings and investment from an early age. This will contribute to a holistic understanding of capital when they grow up. This understanding will help them plan their expenses and grow their wealth better.

Opening a minor Demat account is a simple process. The following documents are required:

Minor’s PAN card required -

The Permanent Account Number of the minor needs to be submitted with the application to open a Demat account in their name. This is a mandatory requirement. The government has also announced recently that the PAN card will be “inoperative” if it is not linked with the AADHAR card by 31st March. In the light of this announcement, both the minor’s PAN card and the AADHAR card need to be made and interlinked before registering for a Demat account in the minor’s name.

Other documents that are needed -

Permanent address proof and identity proof need to be submitted alongside the PAN card.

Two KYCs need to be submitted -

When registering a demat account in a minor’s name, two Know Your Customer(KYC) documents need to be submitted. The KYC for the minor collects basic information. The KYC of the guardian collects personal details, bank account details, and an annual salary range. Financial institutions seek this information as the guardian responsible for the child has the authority to open, handle, and close the Demat account.

Reason for opening the Demat Account -

The reason for opening the demat account in the minor’s name must be stated before the account is issued. This reason needs to be stated in writing. Most institutions accept an email from the guardian as written proof as well.

Since the Demat account is registered in the name of a minor, there are certain restrictions. The important restrictions are given below:

Only equity trading is permitted -

The minor’s guardian cannot do intraday trading using the minor’s trading account. This is because the intraday trading market has greater levels of volatility. Further, financial derivatives like futures and options cannot be traded using a minor Demat account either. Only equities can be bought and sold using a minor’s Demat account

Can’t open a trading account in the minor’s name -

Brokerage firms usually combine trading and Demat accounts into one comprehensive account. The financial law of the land, however, prohibits trading accounts to be opened in the name of minors.

No joint accounts in minor’s name -

A minor cannot be the joint holder of a Demat account. This is because a Demat account for adults and a Demat account for minors have different registration processes. This is also due to the fact that different regulations apply to Demat accounts for minors and Demat accounts for adults.


Your child’s Demat account can be used to grow, and keep track of, funds for their future education needs and other expenses.

The child will also grow up with a greater awareness of the ins and outs of saving and investing money. This financial literacy can be your child’s big competitive edge when he or she grows up. In India, close to 76% of people surveyed for a study showed a poor grasp of the basics of finance. In contrast to this, a child who grows up with an online Demat account will become familiar, from an early age, with the strategies to manage and grow wealth.

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