A Complete Guide to Knowing What Zerodha Offers, Charges and Why or Why Not it is Recommendable

Competing with big players like HDFC and ICICI is indeed a difficult task but Zerodha has managed to remain the Number One discount broker of the country. There are other competitors too such as Upstox, SAS Online, Angel Broking, TradingBells, etc. Zerodha, being the largest discount broking firm in India, enjoys a massive customer base of over two million users and it aims to reach four million subscribers in the upcoming years. It was the only one online trading platform service provider in the time when it was incorporated in 2010. Interestingly, it was the time when the entire world was facing the issues of the global financial crisis occurred in 2009 and within 10 years time the firm had made its way to be called as one of the top broking firms all over the country. The review article from the Trade Brains is exclusively made available to you that will serve as your complete manual and will enable you to study the discount broking firm from the top to the bottom including its history, the fees they charge, why you should consider trading through Zerodha, what are its drawbacks, what range of other products and services they offer apart from the stockbroking service and many more.  

The Origin of Zerodha

Nithin Kamath, the founder of Zerodha, decided to become a stockbroker after trading for almost 10 years when he thought that the time has come to provide a different kind of stockbroking service. He was planning to provide the kind of a stockbroking service that he never came across during the 10 years span of his trading. He observed that most of the trading platforms were not digitized and using old technologies and the users had to go through a particular procedure to trade in the stocks that made it a bit more complicated. He also observed that the reason why the younger generation is not willing to start trading is that there are high brokerage charges implemented on the transactions which these youngsters may be reluctant to pay in the initial years of their career when saving money itself was crucial for them. His aim was to become an online broker using the latest technologies that are more people-first than profit-first. Zerodha is derived from the Sanskrit word Rodha which means Obstructions. The name Zerodha means ‘No Obstructions’. Hence, the founder aimed at providing hassle-free, low brokerage trading platforms. He targeted clients who are young and more tech-savvy to contribute to the capital market ecosystem. According to him, he wanted more of a Google-like platform with a simplicity to use rather than a Yahoo-like platform. When he felt the need to change the system, he along with his younger brother, Nikhil, started Zerodha and the rest is history or rather a case study for everyone.     

Interestingly, the firm hardly spent any money to do the advertising or marketing for its own firm. The founder is the believer of ‘the word of mouth is your true marketing’. Thus, with a very low operating cost Zerodha was able to capture a large number of customers. Trading is provided without any charge at his stock-broking firm if the period of holding for shares is longer than a day. They earn money by charging a flat fee of Rs. 20 for futures, options and intraday trading. While other competitors charge much more than this which is based on the percentage of a transaction traded. The business model on which he works is ‘low margin – high volume’. This firm also developed a strategy to initiate selling Treasury bills, Government Securities and Sovereign Gold Bonds which is everyone’s preference while the markets and economy are facing downfall. This is what is the reason the firm has become one of the top-most broking firms in the country over the eight to nine years of time. To add to that, after facing the hard time, the firm has made its way to persistently increase its customer base year by year.   

List of Charges: Brokerage and Transaction Charges, Account Opening Charges and Other Related Charges

Brokerage and Transaction Related Charges:

EQUITYCURRENCYCOMMODITIES
ParticularsDeliveryIntradayFuturesOptionsFuturesOptionsFutureOptions
BROKERAGEZero Brokerage0.03% or Rs. 20/executed order whichever is lower0.03% or Rs. 20/executed order whichever is lowerFlat Rs. 20 per executed order0.03% or Rs. 20 per executed order whichever is lower0.03% or Rs. 20 per executed order whichever is lower0.03% or Rs. 20 per executed order whichever is lower0.03% or Rs. 20 per executed order whichever is lower
STT/CTT0.1% on buy & sell0.025% on the sell-side0.01% on sell-side0.05% on sell-side (on premium)No STTNo STT0.01% on sell-side (Non-Agri)0.05% on sell-side
TRANSACTION CHARGESNSE: 0.00325%BSE: 0.003%NSE: 0.00325%BSE: 0.003%NSE: Exchange txn charge: 0.0019%NSE: Exchange txn charge: 0.05% (on premium)NSE: Exchange txn charge: 0.0009%BSE: Exchange txn charge: 0.00022%NSE: Exchange txn charge: 0.035%BSE: Exchange txn charge: 0.001%Group AExchange Txn Charge: 0.0026%Far-month Contracts: 0.0013%Group BExchange Txn ChargeCastor seed: 0.0005%Kapas: 0.0005%Pepper: 0.00005%RBDPmolien: 0.001%Exchange txn charge: 0
GST18% on (brokerage + transaction charges)
SEBI CHARGES₹5 / croreAgri₹1 / croreNon-Agri₹5 / crore₹5 / crore
STAMP CHARGESStamp Charges differ from state to state

Account Opening Charges:

Type of accountEquity (for trades on Equity, F&O and Currency)Equity (for trades on Equity, F&O and Currency) and Commodity (MCX)
Online account₹ 200₹ 300
Offline account₹ 400₹ 600
NRI account (offline only)₹ 500N/A
Partnership, LLP, HUF, or Corporate accounts (offline only)₹ 500₹ 800

Charges for Optional Value Added Services

ServiceBilling FrequencyCharges
StockReports+Monthly / Bi-annually / Annually150/810/1440
ScreenerMonthly / Quarterly / Bi-annually / Annually100/285/540/960
SmallcasePer transaction100
SensibullMonthlyFree: 0 | Lite: 800 | Pro: 1300
StreakMonthlyBasic: 500 | Premium: 900 | Ultimate: 1400
Kite ConnectMonthlyConnect: 2000 | Historical: 2000
Pi BridgeMonthly500

Other Charges Not Included Above

ParticularsCharges (Rs.)
AMC Charges300 per year + GST charged quarterly
DP Charges13.5 + GST per scrip on the dat when stocks are sold
Buyback, OFS, NFO Charges20 + GST per order
Physical CMR RequestFirst CMR is free20 + 100(courier) + GST on subsequent request
Payment Gateway Charges9 + GST

Key Features

  • It is a technology-efficient trading service provider where anyone from anywhere can trade online and have access to their stockholdings. 
  • It is also a cost-efficient stock broker as it charges zero cost if the stock holdings are held for a longer than a day and for intra-day transactions are provided at a much cheaper rate than any other service provider.  
  • The platform is quite user friendly in a way that there is no specific training required for any new investor. Everybody using the service will be able to easily go through all the features and the investing and trading are made very easy for everyone.
  • Since it is an online trading platform, there is no need to submit documents online. The account opening process can be done by providing necessary documents and information online. 

Products and Features

In order to stay competitive, the firm launched many products to expand their reach and to overcome some challenges they were facing. Below is a brief on what each product provides:

Z Connect: This is a blog facility regarding stocks, trading and investment with Zerodha. They publish articles and information on this blog and any user is allowed to ask questions and post comments.

Sentinel: A platform that enables you to create market alerts. The alerts can be personalized based on its price, trading quantity and open interest. The interesting aspect of this product is that you do not need to be a Zerodha customer in order to use Sentinel.

Varsity: One of the challenges faced by this firm was that it lacked in providing research services to its customers who are sometimes clueless of what and when to buy or sell. To overcome this, they come up with Varsity that gives a vast collection of stock market lessons on the go.

Kite Connect API: This is mainly for startups to enable them to build an innovative trading and investment platform. Using algorithms, the retail traders can automate their trades.

Coin: Coin provides commission free purchase of mutual funds directly delivered into the customer’s Demat account.

Console: It is a central dashboard of a customer’s account with Zerodha that will provide in-depth reports and visualizations to get more insightful ideas.

Kite: It is a sleek trading and investment platform using latest technologies. It eases customer’s experience to trade and transact in the stock market.

Rainmatter: It is an incubator that provides funding as well as mentorship to startup companies in capital markets and gives minority stake in exchange.

Pros and Cons

Talking about the advantages and disadvantages of trading with Zerodha, it should be noted that the below are the general Pros and Cons and it may be different from person to person as the need and requirement of trading will change also from one person to the other.

Pros: 

  • It provides stock broking services at a very cheap cost and that is the reason it is affordable by everyone. 
  • It is user friendly and hence anyone can easily access their holdings from anywhere.
  • The technology is used efficiently to provide online stock broking services and that is why it gives the simplest form of trading online. 
  • Availability of various application forms online makes their service delivery quicker
  • They also provide a 3-in-1 account (Demat, Trading and Bank) with IDFC.
  • They do not require minimum balance to be kept in the account.
  • Their services also include trading, charting and analytical reports.
  • They provide direct investment in the Mutual Funds that very few brokers provide without the cost.

Cons:

  • The users many times complain about their inefficient customer support and lack of quick customer services. 
  • The firm faces a challenge of login and account opening related issues.
  • Technical errors like, charting functionality of Kite product was reported poor which was basically because of the high market traffic situations.
  • They do not provide free research reports or any recommendation or tips on which stocks to trade or invest into.