Zerodha Boss Nithin Kamath Cheers RBI’s Rs 1 Crore Lending Cap, Urges More Awareness

Zerodha co-founder and CEO Nithin Kamath has welcomed the Reserve Bank of India's recent decision to increase the loan against shares (LAS) ceiling from Rs 20 lakh to Rs 1 crore. Kamath described this as a positive step that could significantly boost the popularity and accessibility of LAS products among retail investors, offering a safer and cheaper borrowing alternative compared to conventional unsecured loans or credit cards.

Key Highlights From Kamath's Views

The LAS limit hike from Rs 20 lakh to Rs 1 crore is expected to enhance credit availability against stock holdings and reduce reliance on costlier personal loans and credit cards that often carry interests above 40%.

Kamath pointed out low awareness among Indian investors about LAS benefits despite its advantages, citing Zerodha Capital's relatively small Rs 450 crore LAS loan book as evidence.

LAS can be especially beneficial for borrowers with limited or poor credit histories since it allows leveraging existing stock portfolios to build credit.

The RBI’s reform package also includes raising IPO financing limits and easing bank lending norms, aimed at creating a more vibrant and flexible credit ecosystem.

Why This Matter For Investors

This change emphasizes secured lending deepening in the capital markets, providing retail investors with cost-effective liquidity options and reducing financial stress caused by high-interest borrowing. It will likely improve investor participation and credit discipline.

Impact On The Market

By facilitating loans against collateralized assets like shares, this reform can boost market stability and confidence, helping portfolios weather volatility while providing timely access to funds without liquidating investments.

Future Outlook

Increased awareness campaigns by fintech leaders like Kamath coupled with RBI’s enabling policies may drive widespread LAS adoption, paving the way for a safer, more inclusive lending landscape for Indian investors.

Source: Economic Times, Zerodha CEO Nithin Kamath (X), Moneycontrol, NDTV