Zerodha Founders Address Regulatory Hurdles in Broking Industry
Brothers Nithin and Nikhil Kamath, Founders of Zerodha, have expressed concerns over the regulatory roadblocks that the broking industry is encountering. The Co-Founders advise the government, regulators, and startups to combine for innovation at a recent podcast, which was recorded at the Bengaluru office of this financial services startup. The Kamath brothers and its CTO Kailash Nadh noted that changing regulations are the top challenge for this fintech startup.
Nithin Kamath said running a broking firm is no easy task, but more regulations could be in the way of growth and stifle entrepreneurship. "Running a broking organisation is not easy", he said. "What India's startup ecosystem has seen is a positive trend, but overregulation would strangle growth".
Nikhil Kamath echoed the exact concerns his brother had, especially SEBI's new rulebook such as the 'true-to-label' circular, which he feels might be detrimental to the revenue growth at Zerodha. As he said, "There is nothing wrong with regulations, but when it reaches a point where it hampers the business by being unpredictable and uncertain then that might begin to be a problem".
"We are at the mercy of regulators whom we have no say over, who can reduce our revenues by 50% in one day or even force us to shut down", said Nikhil. He believes that this climate of a cringing regulatory state might even kill creativity and innovation. "In a classroom where the teacher makes the rules and reprimands at will, will there be innovation from those living in fear? Likely not", he added.
Nevertheless, the Kamath brothers still have positive opinions of the landscape for Indian start-ups-for an environment more supportive of entrepreneurship can significantly boost growth.
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