In its blog post ‘Z-Connect’, Zerodha said that it charged Rs 200 from customers for opening an account and was the only Indian brokerage to do this. It said that there is an actual cost associated with opening a demat account which involves costs related to KYC, documentation, eSign, and human verification, among other things.
It said that if there was no account opening fee to recover the cost, the business could implicitly be pressured to get a customer to transact to recover that cost.
“This isn’t good for the customer or the business in the long run if a customer transacts due to a push from the broker, which causes the customer to lose money. Any attempt to explicitly recover this cost could also mean compromising on the many core principles at Zerodha, like the no-spam policy, no revenue targets for the team, and more. This is also why we don’t spend on advertising,” the blog post said.
“Trading the markets is a serious business with serious risks involved. Collecting an account opening fee right at the start also, in a way, helps set this expectation with a potential customer, filtering out users who may not be serious about trading or investing with us,” the blog said.
The blog said that new account openings, which had dropped off a cliff along with the market drop, are now bouncing back in sync with markets at all-time highs.
Kamath shared the blog on his official X handle as the company is celebrating its 13th year of inception.”We turned 13 on August 15th. Last year, I had made some business predictions, and I was wrong for the third year in a row??. As someone once said, the good thing about being a pessimist is that you are either right or pleasantly surprised, and FY22–23 was the latter, Kamath said.
Kamath said that the company is now trying to create more videos on trading and investing on its YouTube channel.
“We are incredibly proud of the fact that our customers hold over Rs 3 lakh crores of securities in their demat accounts. We are happy that we are playing a role in the financialization of India,” Kamath said in the tweet.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
