Zerodha’s Nithin Kamath claims for loan against equity facility to repay high interest loans

Loan against equity (LAS) is a good way to pay off high-interest debt such as personal loans or credit card dues, Zerodha founder and CEO Nithin Kamath said, while vouching for the discount broker’s LAS business that “just” crossed Rs 500 crore. He was also surprised to learn that many investors were unaware of this facility and ended up taking personal loans.Kamath said Zerodha offers LAS through Zerodha Capital. He added that he hasn’t talked much about this company for several reasons, including regulations. But the reason why this service is offered is because it is a secure product.

“Our Loan Against Shares (LAS) business has just crossed Rs 500 crores. It’s a business that we haven’t talked much about in a long time, for various reasons, including regulations. But the reason why we are offering LAS through @zerodhacapital is that it is a secured product. The other reason is that I think it is a good way to help customers pay off their high interest loans like personal loans, credit card dues, etc. The number of people with investments who have never LAS heard and finally took out a personal loan,” Kamath said in a tweet.Zerodha offers loans in lieu of stocks and mutual funds at rates it claims are lower than personal loans or credit cards.

He recently explained the DP (Depository Participant) costs on the sale of shares.

“When you sell shares, your shares are debited from your demat account and delivered to the clearing house for settlement. This debit attracts a DP (Depository Participant) fee. At Zerodha, this is ₹13.5 + GST ​​per transaction (including ₹3.5 custody fee),” Kamath said in a separate tweet.

Most agents charge a flat DP rate, but some charge a percentage of the sales value, he said. “A DP fee of 0.04% = ₹400 on a sale of ₹10L. Low brokerage fees + high DP fees. That doesn’t make sense,” Kamath’s tweet said.

Also read: What Sebi’s ‘hard ceiling’ of 15% on open interest means for growth of brokers, customers: Zerodha’s Nithin Kamath explains

He also advised investors to beware of brokers who charge DP fees on every sales transaction. “If you sell Reliance four times a day, you will pay four times. At Zerodha, we charge DP fee once per share per day, no matter how many times you sell it,” Kamath added.

“DP fees don’t show up like brokerage, so most people miss it. It’s worth checking what you’re actually paying. These things add up,” Kamath said.

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