Eligibility Criteria and Documents Required to open Demat Account

A Demat (short for dematerialised) account is a critical component of the Indian financial ecosystem, serving as an electronic repository for securities like stocks, mutual funds, bonds, and government securities. Anyone wishing to trade or invest in these instruments must hold a Demat account linked with a depository through a Depository Participant (DP).

Eligibility to open a Demat account depends on several factors including age, citizenship status, type of investor, and regulatory compliance. Whether you’re an individual, a guardian opening an account for a minor, or an NRI, understanding these prerequisites can help you make informed decisions.

What is a Demat Account

A Demat account holds your financial securities in an electronic format. It eliminates the risks of physical share certificates, such as loss, forgery, or damage, and facilitates smoother transactions in capital markets. Managed by depositories like CDSL and NSDL, it ensures safe and regulated access to your investment portfolio.

Importance of a Demat Account

The following are the key benefits of having a Demat account:

• Essential for buying/selling securities on stock exchanges
  

• Enables easy transfer of shares
  

• Required for IPO applications
  

• Central to receiving dividends, interest, and other corporate benefits

Different types of investors are eligible to open Demat accounts. Here’s a breakdown of who qualifies:

Resident Individuals

Any Indian resident aged 18 years or above can open a Demat account independently by fulfilling KYC and documentation norms.

Minors

Minors are eligible to have Demat accounts, but these must be opened and operated by a parent or legal guardian on their behalf. Upon reaching 18 years, the minor must update their KYC to operate the account independently.

Non-Resident Indians (NRIs)

NRIs can open Demat accounts under the Portfolio Investment Scheme (PIS) after receiving necessary approvals from the RBI. Such accounts can be either repatriable (linked to an NRE account) or non-repatriable (linked to an NRO account).

Corporate Entities

Companies, LLPs, and partnership firms can open Demat accounts for business or investment purposes. A resolution from the board or partners and corporate KYC documents are mandatory.

Hindu Undivided Families (HUFs)

HUFs can open Demat accounts with the Karta as the primary account holder and submit the PAN card of the HUF.

Trusts and Societies

Charitable trusts and registered societies can open Demat accounts upon presenting valid registration certificates and KYC documents.

Minimum Age for Individuals

There is no statutory minimum age defined by SEBI for opening a Demat account. However:

• Individuals aged 18 years and above can open and operate Demat accounts independently.

• Minors (below 18) can open a Demat account through a guardian.

Age-Specific Scenarios

Here’s how age impacts account operation and control:

• 18+ Years: Full operational rights and independent access.

• Below 18 Years: Account operated by guardian until the minor reaches majority.

• On Attaining Majority: The account is regularised in the name of the individual after KYC update.

Ensure you have the correct set of documents as follows:

Identity Proof (any one)

• PAN Card (mandatory)
  

• Aadhaar Card
  

• Passport
  

• Voter ID
  

• Driving Licence
  

Address Proof (any one)

• Aadhaar Card
  

• Passport
  

• Voter ID
  

• Electricity Bill/Telephone Bill (not older than 3 months)
  

• Bank Passbook/Statement
  

Bank Proof

• Cancelled Cheque
  

• Recent Bank Statement (3 months)
  

Income Proof (for Derivatives & F&O segments)

• Latest ITR Acknowledgement
  

• Form 16
  

• Salary Slips (last 3 months)
  

• Net Worth Certificate
  

Photograph & Signature

• Passport-sized photograph
  

• Signature specimen (physical or digital)

Role of the Guardian

• Can be a parent or court-appointed legal guardian
  

• All investment decisions and documentation are carried out in the guardian's name
  

KYC Requirements for Minors

• Minor’s PAN card and birth certificate
  

• Guardian’s identity, address, and bank proofs
  

Transfer on Attaining Majority

Once the minor turns 18:

• KYC must be updated with the investor’s details
  

• A new account may be opened and securities transferred

Different investors and entities require specific types of Demat accounts. The table below outlines who can open which type of account and its key features:

Opening a Demat account is the first step toward participating in India’s financial markets. Whether you're a salaried professional, student investor, NRI, or corporate entity, there is a Demat account structure suited to your profile. Understanding the eligibility criteria, age limitations, required documentation, and compliance obligations ensures that your investment journey begins with clarity and confidence.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

1. SEBI - Investor Guidelines

2. NSDL - Account Opening Process

3. CDSL - FAQs on Demat Accounts

4. Zerodha Support - Minor Account Opening

5. Groww - Demat Account Requirements

6. HDFC Securities - Eligibility and Documents