Archive · 28 Aug 2026
Zerodha’s Kamath Warns Margin-Loan Boom Could Spread Market Risk
Zerodha lets some customers borrow money to buy stocks.
This is called margin trading.
Borrowing can increase profits when prices rise, but it can also increase losses when prices fall.
Nithin Kamath said this borrowing has grown quickly at Zerodha.
He warned that a sharp market drop could affect both customers and the company.
Money earned from these loans now makes up about 10% of Zerodha’s revenue.
Kamath also said the stock market’s strong growth has slowed.
He is concerned that heavy borrowing could spread problems across the market if investors are forced to sell.
Nithin Kamath warned that rising leverage at Zerodha could create contagion risk during a sharp market fall.
Interest earned from client leverage accounts for about 10% of Zerodha’s revenue.
Outstanding margin loans reached ₹1.43 trillion, up 53% from the previous year.
Zerodha’s margin-trading facility book grew to about ₹90 billion in August, with clients borrowing roughly ₹60 billion for stocks.
Kamath said the bull market had paused and that user growth and overall activity had slowed significantly.
- Who
- Nithin Kamath, founder of Zerodha Broking Ltd, warned about rising client leverage.
- What
- Kamath cautioned that the growth of margin loans could expose Zerodha to contagion risk if markets fall sharply.
- When
- Kamath made the warning in an annual letter to clients on Wednesday; the article does not provide a calendar date.
- Where
- The warning concerns Zerodha and India’s stock market, described in the article as a $5.2 trillion market.
- Why
- Margin loans and Zerodha’s margin-trading facility have grown substantially, increasing the company’s exposure to leveraged client positions.
- Company
- Zerodha Broking Ltd is described as India’s second-largest stock broker.
- Margin-loan revenue
- Interest earned on leverage extended to clients accounts for 10% of revenue.
- Outstanding margin loans
- ₹1.43 trillion, or about $15 billion, as of Tuesday.
- Annual increase
- Outstanding margin loans were up 53% from the previous year.
- Zerodha MTF book
- The margin-trading facility book reached about ₹90 billion in August.
- Client borrowing
- Clients borrowed roughly ₹60 billion for stock investments, about one-quarter of Zerodha’s net worth.
- Market activity
- Kamath said new-user growth and overall activity had slowed significantly.