Zerodha’s zero-brokerage approach has saved its investors over ₹27,000 crore year-to-date since 2016, Founder Nithin Kamath said. The Bengaluru-based discount broker is one of the very few players that charge zero brokerage on delivery trades, while it charges ₹20 per day on intra-day and futures & options (F&O).
The company would have charged ₹50 currently if it had adjusted for inflation, as per a bulletin on the company’s website on Thursday. Its brokerage has stayed flat even as the rest of the industry revised theirs, it added.
“We don’t send you notifications designed to make you trade more. We don’t push margin funding (MTF) to get you to borrow and trade. We don’t have differential pricing for trading, MTF, or anything else. We don’t cross-sell financial products. We don’t advertise. We don’t track your usage data or mine it to find new ways to extract revenue from you.”
All these were possible as the company has never raised any external capital and doesn’t have a bunch of investors to justify revenue targets to, according to the founder. However, he didn’t deny the temptation to make small tweaks to nudge users a little harder or to squeeze a bit more revenue.
It would have had to start making compromises had the company burnt money on advertising and incentives, which would have then forced it to find ways to make it up to. But Zerodha said it held onto its own philosophy, “don’t do unto others what you don’t want done unto you.” Zerodha continues to attract customers through referrals, with 25-30% of its accounts still coming through this medium.
Kamath also highlighted the constant regulatory risk in the industry. “In the last couple of years alone, we’ve watched entire industries disappear overnight because of a single government or RBI regulation. That’s the reality of operating in this space.”