Zerodha eyed banking license but turned down: Nikhil Kamath

Zerodha co-founder Nikhil Kamath has expressed the company’s desire to become a bank after all attempts over the past several years have not yielded the desired results.

“…We really want to become a bank. Although we have tried for the last several years we have not been allowed,” Nana Kamath told CNBC-TV18 in an interview.

India’s second largest stockbroker Zerodha, which started the discount broking trend in India, saw its FY24 profit rise 62% to Rs. 4,700 crore while last fiscal saw its revenue grow by 21% to Rs. 8,320 crores.

With a 17% market share, Zerodha is the second largest brokerage firm in the country after Tiger Global-backed financial services firm Groww which now controls 25.1% of the stock broking market in terms of NSE active clients.

Despite this, Kamath said the company still cannot rest on its laurels.

“I don’t think we’re at a point in life where we can sit back and be like, ‘What are we going to do with this money,'” Kamath said, emphasizing how much banking the company wants to get. License “…as we want to be many things and bring products in many categories,” he added.

“We are stuck in that place. I don’t think we… ok ye ho gaya abhi kya karna hai place,” said Kamath.

Comparing him to “David”, he said that many others like him are still competing with people who have much more reach than Zerodha.

“In a David vs. Goliath world where the Goliaths are growing up… I would say something along the lines of not a monopoly, we are still David in this story… We are these 1,000 people sitting in the corner of JP town. Bengaluru has to compete with people like that. Trying to get a banking license from someone we have been struggling with for a long time, who we have no influence or access to… can reduce our revenue by 50% in a day…they shut us down after six months. “Maybe, we still feel like some little one in Bengaluru who is lucky to be in the right place at the right time. People and all,” said Kamath.

Capital market regulator Securities and Exchange Board of India (SEBI) has tightened rules in the derivatives segment to control speculative trading after its study found that households are losing money by betting on the high-risk high-reward game of options trading. The study found that in the last three financial years of FY22-FY24, 1.13 crore retail F&O traders spent Rs. 1.81 lakh crore has made a combined net loss.

Founder Nitin Kamath said in a recent tweet that Sebi’s decision to impose stricter rules in the F&O segment could affect as much as 60% of overall F&O trades and around 30% of Zerodha’s overall orders.

Kamath said on social media platform X, “As things stand, assuming weekly trading does not move to monthly trading, it will impact 60% of overall F&O trade and 30% of our overall orders. “

Zerodha, which is yet to change its pricing structure, will decide whether to increase the brokerage based on the business impact after the new rules come into effect from November 20.

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