Nithin Kamath, the founder and CEO of Indian stock brokerage giant Zerodha, has made startling revelations about the United States banking system, labeling it as fundamentally "broken" in a recent social media post that has sparked widespread discussion.
Robinhood's Lucrative Withdrawal Fees Exposed
In a detailed post on X (formerly Twitter), Kamath shared his analysis of American trading platform Robinhood's revenue streams, particularly focusing on instant withdrawal charges. The Zerodha founder disclosed that Robinhood generates approximately $150 million (around ₹1,300 crores) annually from fees charged for processing instant client withdrawals.
Kamath provided a breakdown of these earnings, noting that with processing costs estimated at $35-40 million, the company makes "a clean $100 million to the bottom line" solely from instant withdrawal services. He expressed particular surprise at the fee structure, which can be as high as 1.75% for instant transactions.
India's UPI System: The Game Changer
The Zerodha CEO directly contrasted this situation with the Indian financial landscape, where the Unified Payments Interface (UPI) has revolutionized digital transactions. "We don't charge Zerodha clients for deposits thanks to UPI or instant withdrawals," Kamath emphasized, highlighting the significant advantage Indian consumers enjoy.
To demonstrate the scale of India's digital payment success, Kamath revealed that Zerodha has processed over ₹50,000 crores in instant withdrawals within less than two years, all at zero cost to customers. This stark comparison underscores the efficiency of India's banking infrastructure compared to the US system, where most fund transfers still take several days to complete.
Broader Implications for Financial Ecosystems
Kamath's observations extend beyond mere comparison, touching on fundamental differences in how financial services operate in both countries. He noted that while Indian startups dream of generating substantial revenue from non-core products, the US market demonstrates customer willingness to pay for premium services like instant withdrawals.
This revelation comes at a significant time for Zerodha, as the company prepares to expand its services internationally. In a recent development, Kamath announced that Zerodha plans to enable US stock market investments for Indian users as early as next quarter.
During an 'Ask Me Anything' session on Zerodha's YouTube channel, Kamath confirmed that his team is actively developing this feature. Zerodha CTO Kailash Nadh provided additional context, explaining that the company now has requisite regulatory clarity through GIFT City and is working to create a simple, seamless experience for users.
The discussion around banking system efficiencies highlights India's remarkable progress in digital payments, with UPI emerging as a global benchmark for instant, cost-free financial transactions that benefit both consumers and businesses alike.
