Zerodha's Rs 5 Crore Daily Withdrawal Limit: Security Measure or Investor Concern?

Nithin Kamath clarified that the Rs 5 crore withdrawal limit was implemented as part of standard operational security checks (File)

Mumbai-based investor and IVF specialist Dr Aniruddha Malpani has raised concerns about online broking firm Zerodha allegedly restricting his fund withdrawal attempts from his demat account, despite having over Rs 18 crore available for withdrawal. Dr Malpani highlighted that Zerodha's platform imposes a Rs 5 crore daily withdrawal limit, which he publicly described as a "scam".

The founder of Malpani Ventures provided evidence through screenshots of his Zerodha account displaying an account value of Rs 42,92,98,198.10, with Rs 24,46,44,888.30 used as margin and Rs 18,46,53,309.84 available for withdrawal.

In his social media post on X, Dr Malpani expressed frustration: "The Zerodha scam! They don't allow me to withdraw my own money from their account, saying the daily limit for withdrawal is Rs 5 crores. They use my money for free." He tagged Zerodha co-founder and CEO Nikhil Kamath, adding "This is unfair."

A screenshot from Zerodha's application confirmed this policy: "A maximum of Rs 5 crores can be withdrawn per day. For instant withdrawals, the request must be between Rs 100 and Rs 2,00,000 per day. The withdrawal limit is subject to the availability of a withdrawable balance in the trading account."

Responding to the complaint, Zerodha's customer support team informed Dr Malpani that withdrawals exceeding Rs 5 crore could be processed by submitting a support ticket through their official portal.

After Dr Malpani confirmed he had already submitted the necessary ticket with screenshot evidence, the company assured him that they were reviewing the matter.

Zerodha co-founder Nithin Kamath subsequently addressed the issue, confirming that Dr Malpani's payout requests had been processed. Kamath explained that the Rs 5 crore limit was implemented as part of standard operational checks to mitigate systemic risks.

"We need to ensure, for the sake of our systems' sanity (like all other financial services firms), that we have some checks in place when clients withdraw funds," Kamath stated. "As you can imagine, numerous potential issues can arise during the withdrawal process, and once funds are paid out, there is no way for us to recover them. Hence, Rs 5 crore is the threshold at which we ask customers to create tickets to withdraw."

Ajay Rotti, Founder & CEO of Tax Compaas, defended Zerodha's policy as a necessary security measure rather than a scam. "I would rather deal with a broker who has controls like these and prevents actual scams of someone cleaning up my account in a day," he commented on X.

Rotti further explained that similar limitations exist across various financial systems, including banks and UPI transfers, to ensure security during substantial withdrawals.

"People need to be aware of these limits and plan their transactions if they want to do it online. Else, there is always an option to increase these limits and those need to be used. No point crying Scam for everything on social media," he added.

Zerodha's standard policy allows withdrawals of up to Rs 5 crore per day, with instant withdrawals capped at Rs 2 lakh and available between 9 am and 4 pm, depending on the available balance in the user's trading account.