Zerodha, a technology-enabled stock broking startup, is set to enter the lending business by the next quarter, having received a non-banking finance company licence from the Reserve Bank of India.
The Bengaluru-based company intends to start with small value, short-term loans to consumers collateralised against their securities.
“We plan to roll out lending products by the next quarter. While loan against securities is a very common product, we intend to disrupt the market by offering very small value loans disbursed at a click of a button,” said Nithin Kamath, founder of Zerodha.
Kamath said the company would keep the minimum ticket size of these loans at Rs 5,000 and target lending of Rs 200 crore in the first year.
“Loan against securities currently is more of a product for the high net worth individuals. Our aim is to make it a retail product and also keep interest rates in the range of 12 to 15%,” he said.
As an example, Kamath said if an investor with a mutual fund of Rs 10,000 on the platform needs a Rs 5,000 loan urgently, all the applicant needs to do is click a button. The loan will get approved with the mutual fund as collateral and will be immediately disbursed to the applicant’s bank account.
With the growing popularity of mutual funds, Zerodha claims to have added about 5.5 lakh investors in this financial year, of which 75,000 came on board in January alone.
“Now with 5.5 lakh active investors, we have climbed to the third spot in the rankings of the broking houses in the country, being behind just ICICI Securities and HDFC. We were 11th at the beginning of the year,” said Kamath.
The company hopes to add 50% more investors in the next year and target locations beyond the top 10 cities that are their primary investor bases presently.
In mutual funds, the company’s assets under management touched Rs 1,000 crore in less than a year of launch.