Is Zerodha Safe for Trading and Investing?

Is zerodha safe

Zerodha is one of the biggest stockbrokers in the country, and it is just growing with thousands of new users entering its fold every day. The company has been long known for its dynamic team with its transparent and open business practices, clear vision, mission, and objectives of team.

Throughout its operations so far, Zerodha has not reported any major violations and the company has been pumping money to better its services from its first day of operation. 

At the time of writing, Zerodha has more than 30 lakh customers who trade stocks, commodities, mutual funds, futures, and options through the platform.

Zerodha is a member of the Stock and Exchanges Bureau of India (SEBI) and is a member of the BSE and NSE. Through its CDSL membership, you can get demat account services. 

Look through the following details of Zerodha to finally determine if it is legitimate or not. 

Zerodha Advantages Over Other Brokers in the Market 

  • Zerodha is debt-free: This is a major advantage amongst all startups in India. Being debt-free, all the profits that Zerodha has been making is being effectively utilized to better their team and their offerings. There has not been any form of borrowing from Zerodha’s team as well. 
  • Zerodha does not have margin funding and this eliminates a big risk for stockbrokers. 
  • The pricing model of Zerodha is clean and accessible for all kinds of investors. Whether you are just beginning out, or if you are an experienced investor, everyone has to pay the same cost to invest on the platform. Having a single rate reduces the cost of operations for the team dramatically. 
  • The team in Zerodha does not promise any return or does not provide any advisory. It’s just a platform whereas as an investor, you need to apply your formula to invest and make decisions to buy or sell. Zerodha does not facilitate or promote your investments in any way. There is no conflict of interest on the platform. 
  • Zerodha strictly does not engage in proprietary trading. Many other stockbrokers in the past have been accused of using funds in customer’s accounts to do other forms of trading. But rest assured, the funds you store with Zerodha are safe and secure with all the latest security measures. 
  • There is no risk of credit at Zerodha because the business is profitable, and less than 5% of its entire corpus is being lent to customers. The own funds of Zerodha are so huge, that it is greater than all of the funds of its customers put together. 
  • Compared to other stock exchange brokerages, the complaint ratio in Zerodha is among the lowest. Even the small issues here and there, are quickly resolved by the active and efficient customer support team across various mediums. 

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Memberships in Zerodha 

Recall that Zerodha is listed with the SEBI and is also a member of top stock exchanges such as the NSE, BSE, and MCX. All stockbrokers in the country must register themselves with the SEBI and Zerodha ticks that. Also, memberships with stock exchanges are mandatory to have access. In return, the stock exchanges audit the accounts and activities of the stockbrokers to ensure everything is clean and fair. There have been no major reports of violation by Zerodha so far. 

CDSL is one of the central depositories of India, and Zerodha is a member of it. That allows the customers of Zerodha to open the demat account through CDSL. The demat accounts are not opened by Zerodha themselves, it is just a facilitator between the investor and the CDSL. You can access your demat account on CDSL, even outside Zerodha. 

As per the regulations of the SEBI, every stockbroker needs to have a Power of Attorney. This gives authority to the stockbroker to access your demat account, but for legal and fair purposes such as auto-debit for transactions, etc. As a customer, you can also refuse to give this power to the brokers. But in that case, you will need to manually approve every time there is a credit or debit security on the demat account. 

Final Thoughts: Is Zerodha Safe?

Yes, Zerodha is completely safe, legal, and has a clean record so far at the time of writing. Go ahead, open your account with Zerodha and start trading. The platform has plenty of documentation available online if you are a beginner, it will help you get started. 

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