Minor Demat Account: How to Open One for Your Child
A small gift of shares today can grow into something your child thanks you for, years from now.
Many parents open a savings account for their child the day they’re born. Fewer think about opening a demat account, the account that holds shares and mutual funds. But the idea is the same: start early, and let time do the heavy lifting.
A child who owns a few shares by the time they’re ten doesn’t just have money growing quietly in the background. They also get to watch it happen, ask questions about it, and grow up a little more comfortable with money than most adults are. That’s worth as much as the money itself.
This guide explains, in plain words, how a demat account for a child actually works: what documents you need, who’s really in charge of it, what it can and can’t be used for, and what happens on their 18th birthday.
What is a minor demat account?
It’s simply a demat account opened in a child’s name, for a child who is under 18 years old. The shares and mutual funds in it belong to the child. But since a child legally can’t sign forms or make financial decisions, a parent or court-appointed guardian runs the account on their behalf, right up until the child turns 18.
Think of it like a locker that belongs to the child, but the parent holds the only key for now.
Why some parents choose to open one early
- More time for money to grow. Starting ten or fifteen years earlier gives investments far longer to grow than starting when the child becomes an adult.
- A way to save for a goal. Many parents use it to build toward a child’s future education or other big expenses, instead of leaving the money sitting idle.
- A head start on learning. A child who grows up watching their own small portfolio tends to pick up the basics of saving and investing far more naturally than someone starting from scratch at 25.
- A meaningful gift. Grandparents and family members sometimes prefer gifting a few shares over cash, something the child can watch grow over the years.
Documents you’ll need
You’ll need paperwork for both the child and the guardian. Here’s the full list, in plain terms.
Identity and age proof
- PAN card. The child needs their own PAN card. If they don’t have one yet, it can usually be applied for at the same time as opening the account.
- Proof of age. A birth certificate, passport, or school leaving/identity certificate showing the date of birth.
- Passport-size photo. A recent photo of the child.
The usual KYC documents
- PAN card, linked with Aadhaar.
- Aadhaar or another address proof, such as a passport, voter ID, or driving licence.
- Bank account proof, a cancelled cheque or recent statement, in the guardian’s name.
- Signature and photo of the guardian.
- Proof of relationship with the child, such as the birth certificate (which usually shows the parent’s name already) or a guardianship order, if the person isn’t a natural parent.
How to open a minor demat account, step by step
- Get the child a PAN card, if they don’t already have one. This can often be done alongside the account opening itself.
- Fill the account opening form with the child’s details as the account holder, and the guardian’s details as the person managing it.
- Complete the guardian’s KYC, the same process as opening a regular adult account, including PAN-Aadhaar linking and a photo or selfie.
- Submit the child’s age proof, such as the birth certificate.
- Sign the forms as guardian. Since the child can’t sign for themselves, the guardian signs on their behalf everywhere a signature is needed.
- Wait for verification, and then the account is opened in the child’s name, with the guardian able to operate it.
Some brokers allow this process fully online, while others may need a few documents submitted physically or via a video call, since the account holder is a minor. It’s worth checking this with your broker before you start.
What a minor’s account can and can’t do
A child’s demat account isn’t exactly the same as a regular one. There are a few limits, mainly to keep things simple and safe.
| Allowed | Usually not allowed |
|---|---|
| Buying and holding shares | Trading in futures and options (F&O) |
| Investing in mutual funds | Intraday trading (buying and selling the same day) |
| Applying for IPOs, in most cases | Trading on margin or using borrowed funds |
| Receiving gifted shares from family | The child operating the account themselves, before 18 |
In short, think of it as a long-term, buy-and-hold account. It’s built for steady investing, not active trading.
Who really controls the money?
Legally, the shares and mutual funds belong to the child. But in practice, the guardian makes every decision, buying, selling, or holding, until the child turns 18. Any money earned from selling investments has to be used for the benefit of the child, not for the guardian’s own personal use.
Many parents treat this as a shared project. They show the child what’s in the account, explain simple ideas about saving and investing as the child grows, and let the child take over a little bit of the thinking well before they turn 18.
What happens when the child turns 18?
The account doesn’t automatically keep working the same way once the child becomes an adult. A few things need to happen:
- Fresh KYC is required, this time done by the child themselves, since they can now sign and manage their own investments.
- The account is converted from a minor account to a regular adult account.
- A new bank account link is needed, usually the young adult’s own bank account, instead of the guardian’s.
- Trading permissions can now be added, such as F&O, if the new adult wants them and completes the extra steps required.
It’s a good idea to start this process close to the birthday, so there’s no gap where the account can’t be used. For the full steps on opening and managing an account as an adult, see our documents required guide.
Common questions
1. Can a child of any age have a demat account?
Yes, there’s no minimum age. Even a newborn can have one opened in their name, managed fully by a parent or guardian.
2. Can the child operate the account themselves?
No, not until they turn 18. Before that, the guardian makes every decision and signs every form on the child’s behalf.
3. Does the child need their own PAN card?
Yes. A PAN card in the child’s own name is needed to open the account, even if they’re very young.
4. Can grandparents or relatives gift shares to a child?
Yes, shares can usually be gifted into a child’s demat account from a family member’s own account, as long as the right transfer process is followed.
5. Can a child’s account be used for F&O or intraday trading?
No. These accounts are generally limited to simple investing, buying and holding shares or mutual funds, not active or leveraged trading.
6. What happens to the account if nothing is done on the child’s 18th birthday?
The account typically can’t continue running as before. It needs fresh KYC and conversion to an adult account before the young adult can keep investing or trading through it.
7. Is there a different fee for a minor’s demat account?
This varies by broker, so it’s worth checking directly. See the charges listed below for Ashlar’s current fees.
Opening one with Ashlar
Here’s what you’ll be working with if you open a demat account for your child with Ashlar.
Ashlar at a glance
Ashlar Securities Pvt. Ltd. is a SEBI-registered brokerage.
Stock Broker: INZ000203739
Depository Participant: IN-DP-2362016
Ready to start investing for your child?
Reach out to Ashlar to open a demat account in your child’s name and start building their future, one share at a time.
Investments in securities market are subject to market risks. Read all related documents carefully before investing.
Requirements are based on SEBI and depository norms at the time of writing and may change.