Loan against shares (LAS) is a good way to service high interest debts like the personal loans or credit card dues, Zerodha Founder & CEO Nithin Kamath said, as he vouched for the discount broker’s LAS business that “just” crossed Rs 500 crore. He was also surprised to learn that many investors were unaware about this facility and ended up taking personal loans.

Kamath said that Zerodha offers LAS through Zerodha Capital. He added that he has not spoken much about this business for a variety of reasons, including regulatory. But the reason why this service is offered is because it is a secured product.

“Our Loan Against Shares (LAS) business just crossed Rs 500 crores. It’s a business that we hadn’t spoken about much for a long time, for a variety of reasons, including regulatory. But the reason why we offer LAS via @zerodhacapital is that it’s a secured product. The other reason is that I think it’s a good way to help clients clear their high-interest loans, like personal loans, credit card dues, etc. You’d be shocked at the number of people with investments who haven’t heard of LAS and end up taking personal loans,” Kamath said in a tweet.

Zerodha offers loans in lieu of shares and mutual fund units at rates which it said are lower than personal loans or credit cards.

He recently explained about DP (Depository Participant) charge on the sale of shares.

“When you sell stocks, your shares are debited from your demat account and delivered to the clearing corporation for settlement. This debit is what attracts a DP (Depository Participant) charge. At Zerodha, this is ₹13.5 + GST per transaction (includes ₹3.5 depository fee),” Kamath said in a separate tweet.

Most brokers charge a flat DP fee but some charge a percentage of the sell value, he said. “A 0.04% DP charge = ₹400 on a ₹10L sale. Low brokerage + high DP charges. Doesn’t make sense,” Kamath’s tweet said.

Also read: What Sebi’s 15% ‘hard ceiling’ on open interest means for broker growth, customers: Zerodha’s Nithin Kamath explains

He also advised investors to watch out for brokers who charge DP fees on every sell transaction. “If you sell Reliance 4 times in a day, you pay 4 times. At Zerodha, we charge DP fees once per stock per day, no matter how many times you sell it,” Kamath added.

“DP charges don’t show up like brokerage does, so most people miss it. It’s worth checking what you’re actually paying. These things add up,” Kamath said.

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