How to apply for an IPO in a minor's name: A guide for parents

Investing in an Initial Public Offering (IPO) for your child can be an excellent way to build long-term wealth. Parents can apply for IPOs on behalf of minors, but there are specific steps and regulations to follow, as minors cannot manage financial transactions themselves. Here’s a guide on how to apply for an IPO in a minor’s name and how allotment works.  

Key requirements
To start, parents or guardians need to open a Demat account in the minor's name, with the parent acting as a custodian. A PAN card is also essential for the minor, as it is mandatory for all IPO applications. In addition, a bank account linked to the minor’s Demat account must be set up, often as a joint account with the parent. Once these are in place, the parent can apply for the IPO using the minor's details.  

IPO allotment for minors
IPO allotment works the same for minors as it does for adult retail investors. Shares are assigned via a lottery system in cases of oversubscription. The shares, if allotted, will be credited directly to the minor’s Demat account. However, it’s crucial to manage expectations, as allotments aren’t guaranteed.  

Considerations  
Parents should note that minors cannot operate Demat accounts independently until they turn 18. Additionally, any income from these investments will be taxed in the parent’s hands. Lastly, ensure that IPO investments align with your long-term financial goals for the child, like education or future wealth planning.  

By carefully following the process, applying for an IPO in a minor’s name can be a smart, long-term financial move for your child's future.