Investment of gifts in minors name and tax implications

Hi

     My friends Grandmother a pensioner expired recently. She has  daughters and no son. She had invested some funds in Fixed Deposits with nominees as her daughters. On her death the money from FD has been received by her daughters.

The daughters in turn wish to gift this amount to their (daughters) grand children who are minor so that this fund may be useful in the future.

Questions

1. What are the tax implications if any from grandmother to daughter and further gift to minor grand children
2. How can this amount be gifted to grand children as they are minor and do not have any bank account
3. Alternatively is it possible that daughter gift to their sons/daughter and they in turn gift to there minor children. This would avoid the different procedures KYC etc for the daughters
4. What is the best investment option for minor children (ages between 1-7)

Thanks

Ninad