What is the age required to open a Demat account?

What is the age required to open a Demat account?

There is no particular age limit to open a demat account. Both adults and minors can have their demat account to start stock market trading. Children under the age of 18 can have their minor demat account opened by their parents and guardian. The minor demat account can be easily opened by submitting all the required identity proofs and documents.

Let’s see how you can open a Demat account for a minor.

Who can open a Demat account?

A Demat account is mandatory for investors in India to store the shares they buy or sell online. The Central Depository Services maintain all Demat accounts Limited (CDSL) and National Securities Depository Limited (NDSL). Depository Participants (DPs) facilitate the buying and selling process of shares. 

Any Indian citizen above 18 can open a Demat account. We can also open an account with joint investors, corporate firms, and non-resident Indians.

Even though the Demat account belongs to the minor, they cannot buy or sell the shares themselves. The minor needs a parent or a guardian to act as the dominant party who transfers the shares to the minor’s Demat account. 

All the facts related to the minor Demat account, such as opening, closing, and managing, lie with the minor’s parent or guardian until the child becomes 18 years old.

Opening a minor Demat account online:

You must follow a series of steps to open a minor Demat account. To open a minor Demat account online:

  • Open the website of the stockbroker enrolled with CDSL OR NSDL
  • You need to fill in the basic details like name, email ID, contact number, and more
  • Next, fill in the KYC details of the minor and the parent or guardian 

Documents you must submit:

  • Proof of identity- PAN card
  • Proof of address- Aadhar card of the minor and the guardian
  • Birth certificate of the minor
  • Parent or guardian’s bank account details

Upon successful submissions of the documents, the stockbroker will verify them, and the minor Demat account will get opened.

Remember that you cannot open a minor Demat account as a joint account.

Limitations of Minor Demat account:

While there is no minimum age to open a Demat account, a minor Demat account has certain limitations.

  • A minor cannot operate the Demat account by themselves
  • The stockbroker will ask for the guardian’s documents to open a minor’s account
  • You can only use a minor Demat account for trading in equity delivery and not in equity intraday or currency derivatives
  • You cannot link a minor Demat account to an online trading account

After the minor turns major:

After the minor turns major, the minor Demat account will cease to operate. The account holder must submit a new Demat account opening application form with the required documents.

In a regular Demat account, the guardian’s signature is not required. The account holder can trade or invest the shares in all segments. The new account will receive the shares.

Benefits of minor Demat account:

Better financial planning:

Mutual funds and equity shares provide better returns than other types of investments. A minor Demat account allows the parents or guardians to plan their children’s finances. Therefore, you can use this account to save for your children’s future education, wedding, relocation, jobs, and much more.

Encourages financial literacy:

A minor Demat account helps the children to learn financial independence. As they are involved in the stock market, they develop vital life skills needed to survive in the outside world.

We hope you understand the minimum age of opening a minor Demat account and the account opening process. It’s time to apply the knowledge to create a golden future for your kids.

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Finance