Co-founder of Zerodha Nithin Kamath welcomes the move of RBI to increase the limit of the share to RS 1 crore

Co-founder and CEO of Zerodha Nithin Kamath has welcomed the recent step of the Reserve Bank of India to increase the limit for loans against RS 20 Lakh shares to RS 1 crore, and calls it a ‘good change’ that could help make a more popular loan option in the country.

In a message shared on X (formerly Twitter), Kamath emphasized the revised guidelines of the RBI and expressed the hope that the relocation will increase the visibility and use of LAS products among retail investors.

“A good change from RBI yesterday: banks can now borrow 1 crore against shares, against the earlier RS ​​20 Lakhs,” he wrote, adding: “Hopefully this loan against securities (welding) makes it more popular.”

Link: https://x.com/nithin0dha/status/1973661706070147274

Kamath continued that despite keeping shares, many people continue to rely on personal loans or credit cards that are delivered with much higher interest rates.

Referring to this behavioral trend, he said: “It is ridiculous how many people who hold shares, continue to take personal loans or use credit cards at much higher rates – credit cards can go up to 40%+.” Drawing attention to Zerodha’s own credit company Zerodha Capital, he noted that consciousness of Las Lage remains among Indian investors. “Even at @Zerodhacapital we see this constantly. People just don’t know that they can replace debts with high interest rates, which is a reason that our book is still only RS 450 crores,” he said. Kamath pointed out that LAS can be an ideal option for borrowers who are new to have credit or have poor credit history, because it offers an opportunity to build their existing stock intensions. However, he added: “Consciousness is terrible.”

The relocation of the RBI was part of a wider series of reforms aimed at increasing access to credit and lowering the loan costs. According to the infographic that is shared by Kamath, the reforms of the central bank also include increasing the IPO financing capitalization, relaxing standards for mergers and acquisitions and improving the lens flexibility for banks.

The improvement of the LAS limit is expected to promote secure lending on capital markets and offer investors an alternative to expensive unsecured loans.

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