Demat Account For Minors | My Espresso

Demat Account For Minors

Trading is done by buying and selling securities. These securities include everything from currency and shares to stocks etc. To start trading, an individual needs to have a Demat account. A Demat or a dematerialised account is an account which helps investors hold shares and securities electronically. A Demat account even helps track all the investments and transactions an individual makes in shares, currencies etc. CDSL and NSDL, Central Depository Services Limited and National Depository Services Limited, respectively, maintain these accounts.

Published on 31 January 2023

Did you know it is legal for a minor to have a Demat account? Yes, it is true indeed under the Companies Act,2013. Although, minors only have access to their accounts at the time they turn 18 years old.

Also, it doesn't mean that minors are allowed to trade. The trading is done by their guardian, who is in charge of the Demat account till the minor becomes an adult.

What is a Demat Account for minors?

A Demat account for minors is similar to a regular Demat account. The key differences in a minor Demat account are

  • A minor Demat account is opened in the name of a minor by the legal guardian. All the access and operations related to the account are carried out by the natural legal guardians or the parents of the minor.
  • Currently, only physical applications are allowed to open a Demat account for a minor. The bank account details of the parents/guardians, including documents such as the KYC, PAN card and Aadhaar card of the guardians, are to be submitted along with the minor's birth certificate. Only if the DP- Depository Participant approves them will they be allowed to open a Demat account.
  • The Demat account of a minor will only turn into a regular Demat account once the minor turns 18 and becomes an adult.
  • The parents' signatures are required, along with the child's documents.

Reasons to open a Demat Account for Minors

Who wouldn't want their children's future to be safe and secure? Financial planning is a requisite these days. Parents want the best for their children, and this best means a financially secure future for their children. The various reasons are as follows.

  • They are securing their children's future.
  • They want to save for the education of their children.
  • Wedding funds for their children.
  • Relocation for a job or some other reason.
  • Sending their children abroad to study.

There can be various other reasons, but it all comes down to securing a child's future. You never know what life has in store for you; therefore, every parent would want to secure and leave their children with enough if something were to happen to them.

Rules for Opening a Demat of a Minor in India

There are specific rules to be followed when applying to open a Demat account for a minor. These rules are to be remembered by the parents/ guardians.

  • Intraday trading using a minor's account is not allowed. From a Demat account of a minor, only equity trading is permitted. Equities can only be bought and sold using this account. Since intraday trading is volatile, no risk formula is applied, and even derivatives like futures and options are not allowed.
  • A regular trading account cannot be opened in the name of the minor.
  • A Demat account cannot be opened in joint ownership, nor can a trading account be opened jointly in the name of the minor and the parents/guardians.

 Post 18 years of age-

What happens once the minor becomes a major?

Once a minor turns major, they must submit their fresh KYC with their signatures and their own photograph. Additionally, the minor would have to fill out a new Demat opening form, and once the Depository Participant approves of everything, the Demat account is transferred to become a major account under the supervision of the adult.

What if something happens to the Parents/Guardians?

If some unfortunate mishap were to happen with the parents or the guardians, under this case, the new legal guardians would have to put in a request or an application to change the guardian. In addition to this, they would have to put the death certificate of the previous guardians.


Opening a minor Demat account exposes the children to investments and savings from an early age. This account even helps maintain the minor's funds separately without any confusion. Also, if the child has ownership of any ancestral shares, this account would make it easier for them to acquire these family shares. However, the parents/ legal guardians should be well informed and aware of the rules and regulations regarding Demat accounts for minors so that they don't land themselves in trouble.

Chandresh Khona
Team Espresso

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