Now I have to close my Zerodha account: Bengaluru Techie’s Email Gets Quick Response From Nithin Kamath

A North Bangalore-based techie recently asked Zerodha — India’s largest online stock trading platform — to delete his account and shut down his business with the company. The mail was immediately replied to by Zerodha’s co-founder and CEO, Nithin Kamath, adding to the curiosity about what really is going on inside the company and the larger impact on the users.

The Context: A Request From a Techie

The incident began when a Bengaluru techie wrote to Zerodha complaining about its compliance requirement forcing customers to “close all positions” before closing an account. This compliance policy has thus stirred a degree of controversy among some traders, many of whom find it too cumbersome a process to undertake, especially when they are trying to exit positions in the market quickly or are on a tight budget.

The techie wrote in his email: “I have to close my Zerodha account because of this policy. It should be possible for me to close the account without needing to close all open positions.”

This simple email ended up in an unexpected but fast reply from Nithin Kamath himself. That was despite the fact that it was Kamath’s no-nonsense, hands-on approach to customer queries that inspired him to respond quickly to the techie’s complaint. His response not just resolved the issue but kick started a tsunami of reactions about Zerodha itself, its policies and its customer service.

The Response by Zerodha and the Policy Behind It

Nithin Kamath reasoned in his response that there was a compliance obligation that required customers to close all positions before deleting their account and that this obligation was due to the regulations in place, that ensured that customers do not leave open financial positions which could land them in a financial and legal quagmire.

Since Zerodha is a stock broker and a SEBI (Securities and Exchange Board of India) registered entity, it is required to follow some compliance guidelines and rules and one of them states that at the time of closure of any account, the user should not have any open trades or pending balance. This is to check that there are no outstanding obligations or liabilities that could become due after the account is closed.

Kamath went on to say that even though that may appear as an extra step for customers, it was necessary to avoid any problem down the line like outstanding dues, taxes or unsold securities. This was not a Zerodha-specific rule but akin to the general regulatory practice across the Indian trading landscape.

However, Nithin Kamath later empathetically told the techie and other members of the micro-blogging site that Zerodha perpetually evaluates its processes to be more user-centric and cause lesser trouble.

What’s up right now with Zerodha?

This conversation between Nithin Kamath and the Bengaluru techie got the limelight because Kamath himself responded to the same promptly. Zerodha prides itself on transparency and responsiveness to customers, and Kamath often gets personally involved in fixing issues. It’s a welcome change in an industry where customer service can often feel transactional.

There’s no indication yet that Zerodha will change the compliance mandate, but Kamath’s engagement with users has led to questions about whether the company will do anything in this regard in the future to make the account closure process smoother or clearer.

Traders are now entering debating the pros and cons of Zerodha policies on various forums, with a section appreciating the clarity that Kamath s direct approach has brought, while some are still wishing for a less stringent account closure process.

The Bigger Picture: What’s Going on in Stock Trading Space?

This incident has also shed light on some of the challenges besieging the Indian stock trading ecosystem, particularly account management and regulatory compliance. With so many new participants from all walks of life, there has been the additional pressure from them to know what they were getting into — between, margins, compliance, positions on stocks as people just freely entered the stock market facing the likes of a Zerodha.

After revolutionizing the discount brokerage model in India, Zerodha has always led on the accessibility of stock trading paper. But with increasing users and more complex trades, Zerodha and other such platforms realise that their policies and implementation / enforcement may need to change over time to align with regulatory requirements and customer expectations.

What to Expect in the Future?

Since Nithin Kamath himself has addressed the issue publicly and explained the reasoning behind the policy, Zerodha is probably going to keep this policy and work more on customer service and communication. The easing of process of closing an account might come in to talk again with solutions to make it easier while still complying with necessary regulations.

For Zerodha users or anyone who is thinking of signing up, they must be aware of the policies laid around account closure and compliance. Is there an issue when you close the account or your position? So what’s your opinion on Nithin Kamath’s personal touch to customer service? Share your thoughts in the comments and follow for more updates on Zerodha policy evolution and trading trends!