Nitin Kamath: Why Zerodha shuns personal loans & credit cards

• Zerodha avoids personal loans and credit cards due to higher funding costs (8.5%) compared to banks and large NBFCs, making competitive rates difficult.
• Offering unsecured loans would attract higher-risk customers, increasing default risk for Zerodha.
• The company's brand philosophy rejects aggressive recovery tactics associated with unsecured lending, prioritizing a customer-centric model.
• Zerodha focuses on safer "Loans Against Securities" (LAS), where RBI rules require customers to pledge double the loan value, ensuring repayment capacity.
• LAS is a natural extension of Zerodha's broking business, leveraging existing customer holdings and aligning with its philosophy of need-based, repayable credit.

Why It Matters: Understand why Zerodha avoids risky personal loans, prioritizing brand and safety.