There are many benefits which are associated by opening an demat account for minors under the age of 18, the benefits are not only associated with the minors but also for the guardian of the minors. Compared to the regular demat account, the transfer formalities when using the demat account of minors is very less time consuming.
Besides holding an demat account for an minor also helps to make the financial planning of the child at an early stage. These accounts are used to financially safeguard the future of the child.
Below is the basic information related of Holding an Demat Account for Minors.
Procedure for opening a Demat Account for a Minor.
The process of opening an Demat Account for a Minor is Simple.
List of the documents which needs to shared by the guardian are.
proof of identity
proof of address
photocopy for the proof of age
Submit photographs to the concerned Depository Participant.
Once the required documents have been submitted by the guarding the Depository Participant verifies the documents and captures the details of PAN of the minor the DPM system post verification .
Restrictions imposed on Demat Account of Minor
Compared to a regular Demat Account, the account which held for minor has certain limitations. Below listed are the limitations imposed on Demat account of Minor.
Minor Demat Account is not permitted to trade in certain segments. The segments in which minor demat account is limited to trade are equity intraday, currency derivatives future and options, equity derivative trading (F&O)
Minor cannot be a part of Joint Demat Account.
Only delivery shares can be purchased through an minor demat account.
Demat account of a minor cannot be linked to trading account.
Process to follow to convert minor account.
Below is the process to follow and documents to submit to convert a minor demat account when the minor turns to major.
Minor demat account should submit the KYC application form or details of KRA registration.
Submit new account form with all details duly filled.
Depository participant shall provide a copy of Rights and Obligations document to the account holder and shall hold the acknowledgment of the same on record.
Once the process is completed guardian details shall be deleted and all the guardian will be replaced.
If minor word has been mentioned during opening an account, then existing account would be closed and a new account shall be opened.