Investing isn’t just for adults—teenagers can get in on the action too. If you’ve ever watched movies featuring high-stakes investments and market moguls, you might wonder if such financial opportunities are limited to grown-ups. The good news is that they’re not!
The Companies Act of 2013 allows any Indian citizen to hold securities, irrespective of their age. Thus, you may allow your kid to have a minor demat account and let them learn the basics of investing—a valuable life skill indeed.
When a teenager invests, they get a head start in learning the essentials of investing. They learn how to make financial decisions, set goals, and spend responsibly. But given that all their investments and securities are to be stored in a minor demat account, how do you open one? Let’s see.
What is a Demat Account and Its Minimum Age Requirement?
Let’s first start with what is demat account and how it is related to investments. A Demat account is an avenue that helps investors hold their securities in a digital form. It allows you to buy, sell and hold stocks, bonds, mutual funds, and ETFs.
As for the age requirement to open a Demat account, there is none. Anyone individual of any age can open a Demat account, given certain rules and conditions are being followed. It’s important to understand that a teenager or minor demat account cannot be opened as a joint account.
Prerequisites to Open a Teenage Demat Account in India
Now that you know what a Demat account is and how it helps with investments, let’s proceed further. Here is a list of all essential documents needed to open a teenage demat account in India:
- Pan of the teenager’s parents
- Parent’s address proof. This could be anything like Aadhar, voter ID, or government-related documents
- The birth certificate of the teenager going to be the account holder. The birth certificate must show the parents’ name to verify their relationship with the account holder.
- Parents have to follow the KYC procedures prescribed by the SEBI.
- Minor’s bank account details.
Keeping these documents in handy ensures your account opening goes smoothly and hassle-free.
Filling out the Application Form
Once you’re done honing down all the essential documents, let’s proceed with the application form details. Here are a few pointers that must be kept in mind when opening a minor demat accounts.
Photo Requirements:
No matter if you’re filling out an online or offline demat application form, photos of both the parent and the minor will have to be uploaded.
Signature Requirements:
For online applications, parents can sign online or upload a scanned photo of their signature. For offline forms, parents have to physically sign the form on the teenager’s behalf.
KYC Compliance:
The KYC, or Know Your Customer, compliance is mandatory for both teenagers and their parents. The other compliances that need to be met are Prevention of Money Laundering Compliance and FATCA Compliance.
Things to Know When Opening a Teenager Demat Accounts
While a teenager can open Demat account with ease, there are several points to keep in mind.
- A minor account can never function independently.
- To open a minor account, documents of both teenagers and their parents are needed.
- The trading feature is disabled for minor accounts. Meaning you cannot purchase securities using a minor account. However, you can sell securities using a minor account in certain exceptional situations. For example, if the parent mentioned on the form controls the account.
Teenager Turning 18: What Happens Next?
Once a teenager/minor turns 18, their minor DEMAT accounts is disabled. Post that, they can open a new demat accounts, empowering them to invest and trade securities the way they want. They will not need their parents’ signatures to open this account.
Wrapping Up
Opening a demat account for teenagers can be a way to educate them on financial literacy and independence. Plus, as parents you can also open these accounts for their kids to plan their long-term finances.
Whatever the need, opening a Demat account is easy and hassle-free. Simply keep the relevant documents, understand the procedure, and fill out the form. Open the doors of a financially sound future for your kids by opening their demat accounts.