How to open Demat account for minors?

opening Demat account to minors (under 18) has many benefits, not only for the minor, but also for their guardian. Transfers to a Demat account for minors are less complicated than regular Demat accounts. It is also a great platform to help children plan their financial future. This account is used by many people to invest in mutual fund, stocks and ETF's. To ensure their financial future, they will need to save money over the long-term.

Let's take a look at the Demat account information for minors.

Opening a Demat account in the name of a minor

It is very easy to open an account. The guardian must provide all required documents, including proof of identity, proofs of address, photocopy to prove age and photographs, to the Depository Participant.

After verification, the DP verifies the documents and then captures the PAN information of the minor in DPM.

After successful submission and verification, a Demat account will be opened for minors.

Restrictions on a Minor Demat Account

A Minor Demat account is less flexible than a regular Demat account. These limitations are:

• Trading in certain segments is prohibited: Anyone with a Minor account cannot trade in equity intraday or currency derivatives ( F&O) and equity derivative trading.
• Joint holder A minor can't be part of a Demat account.
• Transaction: This account type allows only delivery shares to be bought or sold
• Demat account: Minors can't link a Demat account to a Trading account

Once a minor becomes major, follow these steps

If the word "minor" is missing from the Account Holder’s name, the following procedure should be followed:

1. Account holder must submit a new KYC application or details for KRA registration
2. The account holder must submit a new account opening application that is complete in all respects.
3. The DP will provide a copy the Rights and Obligations document and keep an acknowledgment on record.
4. The guardian's information shall be deleted and the account holder shall replace it with the guardian’s signature

If the "minor” word was present at account opening, the account must be closed and a new one should be opened.

Procedure to follow in the event of death of a Minor account holder's guardian

The following procedures shall be followed in the event of the death of the guardian for a minor account holder:

1. The DP may receive a copy or original death certificate of the Guardian who has died. If a death certificate is obtained from an online portal of Government, the authorised officer of the DP must verify the details and attach his signature and stamp.
2. The account of the minor shall be frozen according to the appropriate reason code until the new guardian completes all formalities.
3. Original or a copy of the Court Order, duly notarized and attested by a Gazetted officer, if the Court has appointed a new guardian. Chapter 2 Account Opening CDSL-DP Operating Instructions June 2018 Page 5 of 25
4. The new guardian will need to submit a new account application.
5. DP must provide a copy the Rights and Obligations document and acknowledge it to the new guardian
6. The new guardian must submit a new Nomination Form to the minor's account.
7. After verification of the AOF, documentation, the details of the Guardian of the Minor account holder will be appropriately modified in the CDSL System
8. The signature of the guardian who has died shall be removed and the new guardian's signature shall be entered in the CDSL system.
9. POA documents/details (if any) recorded with the signature the deceased guardian shall not be deleted