Zerodha wants banking license but was turned down: Nikhil Kamath
What's the story
India's second-largest stock broker, Zerodha, has tried to get a banking license but was turned down. The company's co-founder Nikhil Kamath revealed the news.
Despite a whopping 62% profit growth for FY24 and a 17% market share, Zerodha's attempts to foray into banking have not materialized.
The company's revenue also increased by 21% to ₹8,320 crore in the same fiscal year.
Financial performance
Zerodha's growth and market position
Zerodha's financial performance for FY24 was nothing short of impressive, with a profit surge of 62% to ₹4,700 crore.
Despite being India's second-largest brokerage firm, behind Groww which holds a 25.1% market share, Zerodha still has a significant presence with its 17% stake in the stock broking market.
Aspiration
Kamath expresses desire for banking license
Despite their financial success, Kamath said Zerodha isn't anywhere close to resting on its laurels.
He said the company is very keen on getting a banking license and expanding its product range across categories.
Kamath compared Zerodha's situation to a "David versus Goliath" scenario, where they are competing with players who have more access than them.
Regulatory impact
Regulatory changes could impact Zerodha's business
The Securities and Exchange Board of India (SEBI) has recently introduced stricter rules in the derivatives segment to prevent speculative trading.
The move comes after a study found that 1.13 crore retail F&O traders, incurred a net loss of ₹1.81 lakh crore in the last three fiscal years from FY22-FY24.
Zerodha's co-founder Nithin Kamath raised concerns on social media that these new rules could impact up to 60% of overall F&O trades, and about 30% of Zerodha's total orders.