![]() ![]() ![]() Will Zerodha look at collateral-free loans and move towards other lending categories? During the launch, the bank had pegged its interest rates at around 10.5 percent. In March last year, HDFC Bank launched a digital Loan against Securities (LAS) product, allowing customers to avail a loan in less than three minutes. These restrictions, though, do not apply for NBFCs. The RBI has capped loans against shares given by banks at Rs 20 lakh for retail customers and this has led them to not go aggressive on the segment. This is the target pool for Zerodha to fly its lending product. There are other factors too that might help catch customers' attention. The platform has 576,319 active users on Zerodha. Nithin says the brokerage adds 50,000 – 70,000 new accounts every month, half of which are first-timers. What, however, will work for Zerodha is the rate at which it is adding new accounts every month. One of the biggest financial players in the market, Paytm, also seems to be gearing up to take this challenge, especially after receiving approval from Sebi (Securities and Exchange Board of India) for its investment arm, Paytm Money.įor loans against shares and securities, Zerodha may be faced with challenges of customer education. Once 150,000 Indians understand the real benefits, then products in the market will pick up due to the network effect.” We believe that there will be a tipping point. The challenge is because users do not understand the benefit of investing in mutual funds directly. But the numbers do not reflect on our platform. Over the last one year, Zerodha has added close to 75,000 users on Coin, with only five percent coming exclusively to buy mutual fund units. Considering Zerodha’s base of 8 lakh trading accounts, this growth seems a bit conservative.Īnd Nithin is cognisant, “Close to 70 percent of our customer base might be having mutual funds. Further, the company expects to lend out Rs 2000 crore over the next two fiscals. The company is looking to make a spread of 3-4 percent on average per loan. The idea, he says, is to keep the ticket sizes small. But as an NBFC, we can take legal recourse,” adds Nithin.Īccording to the Reserve Bank of India's directive, a maximum of 50 percent cash can be lent against shares, and lenders need to keep a strict check on the rating of stocks against which the institutions are lending. So, you are stuck with them and these can possibly become NPAs. ![]() There, however, remains a high risk given cases such as the Nirav Modi scam hit share prices, like was seen in the case of Geetanjali Jewels. “Even if we liquidate those stocks, there are no buyers in the market for such stocks. Therefore, mutual funds units become a lucrative option, where, according to Nithin, the value of the portfolio can fall up to two percent on bad days. So, in the worst case, we liquidate the portfolio and cover the risk if the value of the portfolio deteriorates more than the borrowing,” adds Nithin. The credit risk engine is checking the value of the holdings and the borrowing taken against it. We only have to worry about the value of the portfolio. “The strength of the model is that the customer has a pledge with us, just like a Gold loan. Nithin says if a customer continuously fails to pay interest for a month or more, the portfolio will automatically be liquidated with an intimation. Nithin Kamath, Founder & CEO, Zerodha Non-payment woesįor Zerodha, what matters is the portfolio risk. Nithin says he expects most of the borrowings to be under Rs 10 lakh, and the platform will see most demand for loans of Rs 1 lakh - Rs 2 lakh. What would the action be on the ticket sizes of the loans? While borrowing, a pledge will be marked against mutual fund units or shares, and the borrower cannot sell them until the loan is repaid. Nithin says the effort is to get as many people to take loans against mutual funds as possible, followed by the top 15 pedigree stocks held by the borrower on Zerodha. Further, mutual funds are held longer by an investor,” adds Nithin. “Lending against a single stock is obviously riskier as compared to lending against a mutual fund, which already has a basket of 25 stocks. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |