Minor Demat & Trading Account Explained - IPO

A minor (below the age of 18) can invest in stock market. The guardian operates minor trading account, demat account and bank account. Most brokers in India allow Minor to open account. Read FAQ's about Minor Trading Account, Minor Demat Account, Minor Bank Account, Minor IPO Investment and Minor Tax Related Questions.

How to Open a Minor Demat Account and Apply for IPOs

Investing for your child’s future has become easier with the availability of minor demat accounts. Parents or guardians can now open a demat account for their minor child and even apply for IPOs on their behalf. However, the process involves multiple steps — from obtaining the minor’s PAN to opening a bank and demat account.

Here’s a complete step-by-step guide to go from Zero to IPO-ready for minors.

Step 1: Obtain a Minor PAN Card

The first step toward opening a minor demat account is getting a PAN card for the child.
This can be done through the NSDL (Protean) PAN Application Portal.

Application Process

• Visit the NSDL PAN Application Portal online.
• Fill Form 49A — this is the official PAN application form for Indian citizens.
• Since minors cannot use e-KYC or e-sign, the form must be printed and sent via Speed Post to NSDL.
• Once submitted, NSDL verifies the documents and issues the PAN card.

Documents Required

• Minor’s Aadhaar card (even if the photo or mobile number is not updated)
• Minor’s birth certificate
• Minor’s passport-size photograph
• Guardian’s PAN and Aadhaar card
• Guardian’s signature on Form 49A (on behalf of the minor)
• Minor’s photograph affixed to the form

Submission

Post the completed form and documents to Protean (NSDL) through Speed Post.

Timeline

It generally takes 5–7 days from dispatch to PAN generation.
In many cases, the e-PAN is issued within 3–4 days after receipt and verification.

Note: If the minor’s Aadhaar mobile number is not updated, it can be done separately through NSDL. This should ideally be completed before opening the demat account, as Aadhaar OTP verification will be required later.

Step 2: Open a Minor Savings Account with HDFC Bank

After obtaining the minor’s PAN, the next step is to open a Minor Savings Account — a mandatory requirement for linking with the demat account.

Recommended Account Type

Opt for a Regular Minor Savings Account. Avoid the Kids Advantage Account unless you specifically want value-added features like insurance or educational tools, as these accounts include extra requirements.

Documents Required

• Minor’s PAN and Aadhaar
• Guardian’s PAN and Aadhaar
• Guardian’s HDFC cheque (for initial deposit)

In-Branch Process

• The entire process is handled by the guardian.
• The minor’s physical presence is not required.
• Address verification may be done by the branch staff (usually takes a few minutes).
• In case of a different mailing address, it can be updated during verification.

Account Features

• Operated via the guardian’s NetBanking login.
• The ASBA (Application Supported by Blocked Amount) feature is enabled — essential for IPO applications.
• FD sweep-in facility is available.
• The bank may issue a Welcome Kit containing a passbook and a cheque book.

Timeline

Account opening typically takes 5–7 working days.
Some users have reported receiving the passbook in-branch first, followed by another copy in the welcome kit later.

Step 3: Open a Zerodha Minor Demat Account

Once the PAN and bank account are ready, you can proceed to open a minor demat account with Zerodha.

Zerodha offers a streamlined process for Under Guardian (UG) accounts.

Documents Required

• Minor’s PAN and Aadhaar
• Guardian’s PAN and Aadhaar
• Minor’s birth certificate
• Minor’s passport-size photograph
• Guardian-minor live photo (both visible in one frame)
• HDFC passbook (first page copy)

Both the guardian’s and the minor’s Aadhaar details will be required for verification.

Online Process

1. Visit the Zerodha Minor Account application page.
2. Upload all required documents.
3. Complete eSign using the guardian’s Aadhaar OTP.
4. Submit the form for verification.

Timeline

• KYC approval takes approximately 24 hours.
• Demat account (BO ID) is usually generated within another 24 working hours.

Many users have reported successful activation within 18–36 hours, including exchange verification.

Check more details: Zerodha Minor Account Explained

Pro Tips and Insights

• Always use the minor’s PAN while applying for IPOs through NetBanking.
• FD sweep-in functionality in HDFC minor accounts is allowed.
• The guardian does not necessarily need to have an HDFC account for Zerodha linking; you can open a minor bank account with other banks.
• Minor’s Aadhaar mobile number is not required for PAN application.
• Zerodha does not charge any Annual Maintenance Charges (AMC) for minor accounts.

ASBA PAN Mismatch Issues in Minor Accounts

Applying for IPOs through ASBA using a minor’s bank account and minor’s Demat often leads to PAN mismatch errors. This usually happens because most banks link the guardian’s PAN as the primary PAN for the minor’s bank account. When the ASBA system fetches details during IPO registration, it reads the guardian’s PAN instead of the minor’s, leading to errors.

Why PAN Mismatch Occurs in Minor ASBA Applications?

When a minor savings account is created, many banks follow this internal mapping:

• Guardian’s PAN → Used as primary PAN for verification and transactions
• Minor’s PAN → Stored only for record purposes

During ASBA IPO registration, the system automatically pulls the primary PAN associated with the bank account. So even if the application is being made using a minor’s Demat, the ASBA interface still displays the guardian’s PAN, resulting in errors such as:

• “PAN mismatch with Demat”
• “Invalid PAN for IPO application”
• “Name/PAN mismatch between bank and Demat account”

Bank-wise Behaviour for Minor ASBA IPO Applications

Below is a clear view of how major banks handle PAN mapping for minors under ASBA:

Axis Bank Highest Number of PAN Mismatch Issues

• ASBA usually displays the guardian’s PAN even for a minor’s bank account.
• The system does not treat the minor’s PAN as the primary PAN.
• This leads to PAN mismatch with NSDL/CDSL while applying for IPOs.

Solutions

• Request the branch to mark the minor’s PAN as the primary PAN (often denied due to internal policy).
• If not possible:
  ✔ Apply through UPI instead of ASBA.
  ✔ Use the guardian’s bank account and apply on behalf of the minor (allowed if Demat is in the minor’s name).

ICICI Bank 

• ICICI usually maps and displays the minor’s PAN correctly in ASBA.
• Minor ASBA IPO applications generally go through without errors.

Note:  If the branch has not properly updated the minor’s PAN, ASBA may still show the guardian’s PAN. A correction request may be needed.

SBI Bank for Minor ASBA

• SBI supports minor ASBA IPO applications effectively.
• Minor’s PAN is usually mapped correctly.
• Very few complaints regarding PAN mismatch.

Motilal Oswal No Direct ASBA (Works Differently)

• MO does not offer bank-based ASBA like ICICI/SBI/Axis.
• IPO applications are processed through:
• UPI, OR
• MO’s internal system, which uses the guardian’s PAN.

Outcome

• PAN mismatch does not arise since ASBA is not used.
• But the IPO application is often treated as the guardian’s application unless broker manually maps minor details.

Summary:

Opening a minor demat account is an excellent way to introduce children to long-term investing early in life.
While each step requires document verification and guardian oversight, the process is smooth once you follow the sequence — PAN → Savings Account → Demat Account. This structure ensures the minor is IPO-ready with all legal and operational requirements fulfilled.

The income from a minor’s trading or investment account is not taxed separately. It is added to the parent’s income and taxed at the parent’s applicable rate, with a small ₹1,500 per child exemption allowed.