‘Can’t compete on...’: Nithin Kamath explains why Zerodha won’t enter personal loans, credit cards

Zerodha co-founder and CEO Nithin Kamath has once again underlined the brokerage’s conservative approach to consumer lending, saying the company has no plans to enter the crowded market of personal loans or credit cards despite their high margins. 

In a detailed post on X, Kamath addressed what he said was a recurring internal question: why Zerodha Capital only offers Loan Against Securities (LAS) and not unsecured credit products. 

Kamath explained that the economics do not work in Zerodha’s favour. 

• Zerodha’s cost of funds stands at 8.5%. 
• In comparison, banks borrow at 3.5%, and large NBFCs at around 7%. 

This gap puts the brokerage at a structural disadvantage. “We can't compete on rates, and usually the best borrowers go where the rates are the lowest,” Kamath wrote. Without competitive interest rates, he added, any unsecured loan offering would only attract borrowers rejected elsewhere — typically those with lower credit scores. 

Unsecured lending 

Kamath said unsecured lending brings an entire ecosystem of collections, recovery agents and repayment chases — something the company wants to stay far away from. 

“That’s exactly the kind of incentive cycle we don’t want to participate in. Also not good for the brand we have built,” he noted. 

The CEO has been vocal in previous interviews about prioritising customer trust and long-term stability over aggressive growth tactics. 

Zerodha philosophy 

Loans Against Securities, however, align with the firm’s operational model and risk philosophy. 

• RBI mandates a 50% haircut on securities offered as collateral. 
• Borrowers must hold assets worth at least twice the loan amount, making it structurally safer. 
• Zerodha is therefore able to offer LAS at 10-11% interest, significantly lower than unsecured loan rates. 

“Lower risk means we can offer lower rates,” Kamath explained. More importantly, he said, LAS supports the company’s fundamental belief that credit should be used only when necessary and within a borrower’s means. 

Strategic fit with broking 

Zerodha’s LAS offering is positioned as a natural extension of its broking services. Since customers already hold securities with the platform, the process is seamless and operationally efficient. 

“In most markets, brokers don't even need an NBFC license for this. It's essentially a broking function,” Kamath said, emphasising that Zerodha does not view credit as a growth engine but as an add-on feature that makes sense only within its core ecosystem. 

As fintechs, banks and NBFCs compete fiercely in India’s booming unsecured credit segment, Zerodha continues to chart a contrarian path — prioritising reputation, risk control and structural sustainability over expansion into high-margin but high-risk lending categories.

Kamath’s latest remarks underscore Zerodha’s long-standing strategy: simplicity, prudence, and staying in businesses where it has a clear and defensible advantage.