Did Zerodha stop a client from withdrawing his funds?
What's the story
Zerodha, one of India's leading stockbrokers, faced allegations from Dr. Aniruddha Malpani on X regarding the withdrawal process for large sums. Dr. Malpani claimed that Zerodha was using his money "for free" due to the requirement for additional verification for withdrawals exceeding ₹5 crore. He highlighted this withdrawal process and tagged Zerodha CEO Nithin Kamath in his post. In response to the allegations, Kamath clarified that the payout requests were processed yesterday.
CEO response
Payout requests processed yesterday: Kamath
Kamath explained that the ₹5 crore limit is a precautionary measure to maintain system integrity and prevent potential issues during withdrawals. "Once funds are paid out, there is no way for us to recover them," he said, adding that this limit prompts customers to create tickets for withdrawals above this amount.
Withdrawal protocol
The ₹5cr limit is a security measure, not a cap
Zerodha's ₹5 crore limit isn't a cap on withdrawals but a security measure. It ensures additional checks are done before processing high-value transactions. Once verified, the funds are processed like any other payout. This practice is common across financial services firms to prevent errors or fraudulent transactions, while maintaining system stability amid thousands of daily transactions.
Public response
Users back Kamath, praise prompt communication
Kamath's clarification was well-received by many users who appreciated his transparency and prompt communication. One user called the ₹5 crore limit a "solid safeguard" and praised Kamath for his real-time response. Another user expressed confidence in Zerodha's commitment to its customers, further highlighting the positive reception of Kamath's clarification among the public.
Industry practice
Incident sparks debate on broker transparency
The incident has reignited a debate among traders about the transparency of withdrawal limits and timelines. Kamath's response comes amid growing retail participation in equity and derivatives markets. India's market regulator SEBI mandates strict segregation of client funds and monitoring of broker operations. While same-day, instant withdrawals are available in limited circumstances, large-value payouts often involve additional verification, a common industry practice to guard against fraud and compliance risks.