How to Invest in Mutual Funds in a Minor Child’s Name?

Investing in mutual funds is something we are all familiar with. Did you know, that you can invest in mutual funds on behalf of a minor? This means even if your child is below 18 years of age you can have a mutual fund investment in his/her name. Before investing in the minor’s name, it is first necessary to comprehend how the procedure works.

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How Can You Invest in Mutual Funds in the Name of a Minor?

The parent or guardian must open a mutual fund portfolio in the name of the underage kid and manage it. It is simply because a minor cannot make financial decisions. One thing to remember is that the minor's investment in a MF cannot be held in joint names. It is best to keep it exclusively in the minor’s name who will be the first and only account holder.

If you are thinking long-term, you can set up a systematic investment plan (SIP) in the minor's name. The SIP debits might originate from either the parent's bank account or the minor child's account, which is under the care of the authorized guardian. One thing is crucial in this case. 

Follow this procedure to invest in mutual funds in a minor child’s name:

To open an account on behalf of a minor, you need to submit any of the following documents:

  • The minor's birth certificate

  • School-leaving certificate or mark sheet from any recognized board such as ICSE, CBSE, etc.

  • The minor's passport

  • If a natural guardian invests, you must submit a document that proves the relationship with the minor if it is not included in the documentation listed above.

  • If a court-appointed legal guardian invests, a copy of the court order appointing the Legal Guardian has to be submitted.

People also read: Child Education Plan

Procedure in the event of a guardianship change

The following documents are required by AMFI (Association of Mutual Funds in India) when the minor’s guardianship changes, either due to the parents’ mutual consent or due to the existing guardian’s death:

  • A standard / prescribed application for change of guardian of the concerned minor 

  • A copy of the new guardian's PAN card and acknowledgment of KYC

  • A canceled check confirming the change of guardian in respect of the child's registered bank account in the new guardian's name.

  • If the previous guardian is alive, a consent letter from them or a court order for a new guardian is required.

  • Where applicable, a copy of the deceased guardian's death certificate, duly attested by a Notary Public, a Judicial Magistrate First Class (JMFC), or a Gazetted Officer, or by an AMC authorized officer following verification of the original.

  • A natural guardian (father/mother) or a court-appointed legal guardian must be named the new guardian. The new guardian's name and signature should have been recorded with the minor's bank account as the guardian.

  • The signature of the new guardian must be officially attested by the existing guardian’s signature which is registered in the mutual fund's records. The change in guardian needs to be done with mutual permission between the parents.

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Documentation Required for Investing in a Minor's Name

Following important documents are required to start a mutual fund folio for a minor: 

  • To begin, you need to verify the minor's age and date of birth. This needs to be presented in a birth certificate, or a passport issued by the government.  

  • You need to establish the minor's relationship with the guardian in the second document. 

  • In the case of parents, a birth certificate or passport with the parent's name on it is sufficient. A copy of the court order will be requested in the case of a legal guardian. 

  • In addition, the minor's parent or guardian will need to comply with existing SEBI laws on KYC. As previously indicated, the SIP will be valid only until the minor reaches the age of 18, after which it will automatically terminate. After that date, the minor who has become an adult must complete the KYC process in her name. 

What Does Happen When the Child Attains Maturity?

  • The parent or guardian can only operate the minor's account until they reach the age of majority. Once the child reaches the age of eighteen, he/she must fill out an application for a change of status from Minor to Major (MAM form). You need to submit the form along with the required papers. You cannot make any transactions from the fund until this process is completed. In other words, on the day the minor reaches the age of majority, the minor's account is frozen for operation by the guardian.

  • The account holder will continue to receive dividend payments. The payments will be deposited to the unitholder's bank account or they will be reinvested in the portfolio, as applicable.

  • The unitholder should do the following before completing the MAM application form for a status change from minor to major:

    • Make an application for a PAN and receive a PAN card.

    • Complete the Know Your Customer procedure.

    • Change their status in an existing bank account from minor to major. 

    • The minor needs to have a new bank account. They also need to get a new chequebook with their name on it as soon as they become a major.

After completing the preceding stages, the applicant must provide the following documents:

  • MAM form completed to the letter

  • A copy of the applicant's PAN card

  • KYC acknowledgment or a KYC form that has been duly completed.

  • The applicant's current passbook/ statement of bank or a canceled cheque leaf with the applicant's name pre-printed.

  • Annexure 1 has the bankers' signing attestation (if the signature of the applicant is not attested by the guardian or a Notary or a JMFC in the MAM form)

  • Form for Nomination

  • A new STP, SIP, or SWP mandate in the prescribed format is needed (to continue the STP, SIP, SWP, if applicable.)

  • Once the child reaches maturity, they will be responsible for all applicable taxes deriving from the portfolio's income. The profits will no longer be included in the parent's income.

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In Conclusion

With their ability to compound capital, mutual funds are fantastic investment options for securing your children's future. Setting away a tiny amount of money each month for your child's education fund will give them a leg up. Mutual funds are a simple and practical approach to developing a considerable fund for your children's future. 


  • Is it possible to invest in a mutual fund in the name of a minor child?

    Yes, you can invest in a mutual fund (MF) in the name of a minor kid in any scheme offered by any fund firm. In such a portfolio, the minor must be the first and only holder. This portfolio will not allow any joint holders. The folio's guardian should be either the child's parent or a court-appointed legal guardian.
  • Can I even open a SIP or STP in a young child's name?

    Yes, in a portfolio held by a minor, a mutual fund will file investor instructions such as SIP and STP. However, even if the instructions are for a longer duration, this instruction will only be valid until the minor reaches the age of majority.

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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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