Xerod co-founder Nithin Kamath received the RBI’s share-back loan limit of Rs. Welcome to increase 1 crore.

Xerodha co-founder and CEO Nithin Kamath has welcomed the Reserve Bank of India’s recent steps to raise a loan against a share of Rs 20 lakh to Rs 1 crore, which can be considered a ‘good change’ which can help securities (LAS) become more popular in the country.

In a post shared on X (previous Twitter), Kamath released the RBI’s revised guidelines and hoped that this step would increase the visibility and use of LAS products among retail investors.

He wrote, “A good change from RBI yesterday: Banks can now lend up to Rs 1 crore against stocks, more than Rs 20 lakh,” he added, “Hopefully, the securities (LAS) are more popular.”

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

Kamath further described that despite holding stocks, many people rely on personal loans or credit cards that come with higher interest rates.

Referring to this behavioral trend, he said, “It is ridiculous that how many people have stocks continue to take personal loans or use credit cards at a higher rate – credit cards can go up to 40%+.”

Taking a look at Zerodh’s own credit business Xerod Capital, he noted that there is a low awareness of LAS among Indian investors. “Even on @Xerator AP Pittal, we see this constantly. People are not just aware that they can change the high-interest debts with LAS, this is one of the reasons that our book is still only Rs 450 crore.”

Kamath pointed out that L.S. It can be an ideal option for borrower who are new to credit or credit history is poor, as it offers the opportunity to create credit while taking advantage of their existing stock holdings. However, he added, “Awareness is terrible.”

The RBI step was part of the widespread set of corrections aimed at raising credit access cess and reducing borrowed costs. According to infographic shared by Kamath, Central Bank reforms include raising IPO financing caps, facilitating the standards for M&A funds and increasing lending relief for banks.

The growth within the LAS limits is expected to promote secure credit in capital markets and provide the option of unsecured loans at high cost.

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