Zerodha co-founder Nithin Kamath welcomes RBI’s move to raise share-backed loan limit to Rs 1 crore

Zerodha co-founder and CEO Nithin Kamath has welcomed the Reserve Bank of India’s recent move to raise the limit for loans against shares from Rs 20 lakh to Rs 1 crore, calling it a ‘good change’ that could help make Loan Against Securities (LAS) a more popular borrowing option in the country.

In a post shared on X (formerly Twitter), Kamath highlighted the RBI’s revised guidelines and expressed hope that the move will increase the visibility and usage of LAS products among retail investors.

“One good change from RBI yesterday: banks can now lend up to Rs 1 crore against shares, up from the earlier Rs 20 lakhs,” he wrote, adding, “Hopefully, this makes loan against securities (LAS) more popular.”

Link: https://x.com/Nithin0dha/status/1973661706070147274

Kamath further elaborated that despite holding stocks, many people continue to rely on personal loans or credit cards that come with much higher interest rates.

Referring to this behavioural trend, he said, “It’s ridiculous how many people holding stocks continue taking personal loans or using credit cards at much higher rates—credit cards can go up to 40%+.”Drawing attention to Zerodha’s own lending business Zerodha Capital, he noted that awareness of LAS remains low among Indian investors. “Even at @zerodhacapital, we see this constantly. People just aren’t aware they can replace high-interest debt with LAS, which is one reason our book is still only Rs 450 crores,” he stated.Kamath pointed out that LAS can be an ideal option for borrowers who are new to credit or have poor credit histories, as it offers an opportunity to build credit while leveraging their existing stock holdings. However, he added, “awareness is terrible.”

The RBI’s move was part of a broader set of reforms aimed at increasing credit access and reducing borrowing costs. As per the infographic shared by Kamath, the central bank’s reforms also include raising the IPO financing cap, easing norms for M&A funding, and enhancing lending flexibility for banks.

The enhancement in the LAS limit is expected to promote secured lending in the capital markets and offer investors an alternative to high-cost unsecured loans.

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