Why Zerodha says no to credit cards and personal loans, according to Nithin Kamath

Zerodha co-founder and chief executive Nithin Kamath has explained why the company has chosen to limit its lending business to loans against securities and has stayed away from products such as personal loans and credit cards.In a post on X, Kamath said the question came up internally on why Zerodha Capital does not offer unsecured credit products that typically carry much higher interest rates. He said the main reason is that Zerodha cannot compete on funding costs. According to him, Zerodha’s cost of funds is around 8.5%, while banks raise money at roughly 3.5% and large non-banking finance companies at around 7%.Kamath said this makes it difficult to compete on interest rates. He added that in lending, the best borrowers usually go to institutions offering the lowest rates. Without a ra