In a recent social media post, Mumbai-based IVF specialist and investor Dr. Aniruddha Malpani made shocking claims about the popular brokerage platform, Zerodha. He alleged that despite his account showing a withdrawable balance of ₹18 crore, the platform only allowed him to withdraw ₹5 crore per day. Dr. Malpani referred to this issue as a “scam,” sparking a heated debate across the investor community.
Dr. Malpani’s posts on social media soon went viral. Taking to X (formerly Twitter), he voiced his frustration in a strongly worded message:
“Zerodha won’t let me withdraw my own money, limiting withdrawals to ₹5 crore per day. This is outrageous! They are using my funds without permission!”
His claims quickly went viral, sparking concern among users, particularly those with substantial investments. His frustration stemmed from the belief that the withdrawal restriction was unfair, particularly when his available balance was significantly higher than the allowed limit.
Zerodha Responds: A Standard Security Measure
In response to the claims, Zerodha CEO Nithin Kamath personally addressed the issue, providing a detailed explanation. According to Kamath, the ₹5 crore daily withdrawal cap is not a block on funds but a security safeguard designed to ensure safe and secure transactions.
Kamath clarified:
“We place a limit on large withdrawals to ensure that there is a proper process in place. For any transaction over ₹5 crore, we require a manual check through a customer support ticket. This isn’t a freeze on funds but a necessary precaution to prevent any errors or fraudulent activity.”
He further stated that Dr. Malpani’s withdrawal request had been processed in accordance with the system’s guidelines, and the funds were not permanently locked.
Kamath explained the rationale behind the policy:
“While small transactions are processed directly, for large sums, additional verification is required to ensure the security of the transaction. This policy is common across many platforms dealing with high-value transfers.”
What It Means for Investors: Transparency and Caution
For Large Investors
This incident underscores the importance of being aware of platform policies, particularly when handling large amounts of money. It’s not uncommon for brokerage firms to implement checks for high-value withdrawals to prevent fraud. However, this issue raises questions about how transparent and clear such policies are to users, particularly those with substantial funds.
For Regular Investors
While most retail investors won’t typically encounter such issues, it is crucial to be informed about withdrawal procedures. Some platforms may have limitations or checks in place for larger transactions, and understanding these can save time and avoid confusion.
Brokerages and Financial Services
Zerodha, known for its low-cost model, has faced scrutiny over its customer service and operational efficiency in the past. The controversy over the withdrawal policy highlights the delicate balancing act that brokerage firms must perform: ensuring security and preventing fraud, while also prioritizing customer convenience. Several users have suggested that systems could be designed to automatically flag large withdrawals, thereby eliminating the need for manual intervention.
Regulatory Concerns
This issue may prompt regulators, such as the Securities and Exchange Board of India (SEBI), to investigate whether withdrawal policies are being clearly communicated to users at the time of account setup. If this issue affects many investors, it could lead to calls for more transparent policies and stronger regulations around withdrawal limits and customer access to their funds.
Practical Tips for Investors:
- Read the Fine Print:
Ensure you review your platform’s terms and conditions, particularly the fine print regarding withdrawal policies. Be aware of any limits, fees, or manual intervention requirements. - Plan for Large Withdrawals:
If you anticipate needing a large sum of money, please don’t hesitate to contact customer support in advance to understand the process and avoid potential delays. - Keep a Record:
It’s essential to maintain a log of all your communications with customer service regarding withdrawal issues. Screenshots, email exchanges, and app notifications can serve as evidence in the event of a dispute. - Diversify Your Portfolio:
To avoid any inconvenience caused by platform-specific policies, consider diversifying your investments across multiple platforms. - Stay Calm and Be Clear:
While allegations of a “scam” can be alarming, it’s often a matter of process or misunderstanding. Keeping a level head and communicating directly with the platform can help resolve issues quickly.
Final Thoughts: Is Zerodha’s Policy Unfair?
The controversy surrounding Dr. Aniruddha Malpani’s claim of being unable to withdraw his funds is a critical reminder for investors to understand the systems and policies of the platforms they use. Although Zerodha’s explanation of the ₹5 crore cap makes sense as a precautionary measure, the optics of a large investor being unable to access their funds immediately raise concerns.
For those of us invested in the market, it’s a wake-up call: ensure that your platform is transparent about its withdrawal processes and stay informed about the fine details of account access. A platform that handles large sums must strike a balance between security, transparency, and user convenience—something all investors should prioritize.
