Zerodha changed the way millions of Indians think about stockbroking. You can open an account for free, buy shares for long-term delivery without paying brokerage, and invest in direct mutual funds without paying a commission to Zerodha.
That creates an obvious question: if some of Zerodha’s most popular services are free, how does the company make so much money?
The answer is that Zerodha follows a simple low-cost model. Long-term equity investing and direct mutual funds help attract and retain customers. Revenue mainly comes when customers trade actively, borrow money through margin products, maintain demat accounts, use certain paid services, or take loans through other Zerodha businesses.
The scale makes this model powerful. Zerodha currently says more than 1.8 crore customers trust the platform with around Rs 9 lakh crore of equity investments, and its customers contribute roughly 15% of India’s daily retail exchange volumes. In FY2025-26, Zerodha reported profit after tax of about Rs 4,283 crore. Brokerage income was about Rs 2,738 crore, while interest income had grown into another major revenue stream.
To understand the Zerodha business model, we need to look beyond the headline of ‘zero brokerage’ and see where the company actually charges customers and earns recurring income. Let’s break down the model step by step.
1. Intraday and F&O Brokerage: The Core Money-Maker
Zerodha does not charge retail individual customers brokerage on normal equity delivery trades. If you buy shares and keep them in your demat account as an investment, the brokerage is zero.
But active trading is different.
Zerodha currently charges the lower of Rs 20 or 0.03% per executed order for equity intraday and futures trades. Options trades are charged a flat Rs 20 per executed order. Similar flat or capped brokerage applies to currency and commodity trading.
Imagine Arjun buys and sells an intraday position. If the calculated percentage charge is more than Rs 20, Zerodha still caps the brokerage at Rs 20 for that executed order. A trader who places many orders during the month can therefore generate much more brokerage revenue than a long-term investor who buys shares only a few times a year.
This is why derivatives and other leveraged trades have historically been so important to the business. Zerodha has openly said that a relatively small group of active traders can contribute a very large share of brokerage-industry revenue. In a July 2026 conversation, Nithin Kamath said roughly 85% of Zerodha’s revenue comes from leverage-related trades.
The latest financial numbers show how important brokerage remains. Zerodha’s brokerage income was about Rs 2,738 crore in FY2025-26, although it declined from the previous year as market activity and derivatives trading cooled.
So the first major answer is simple: Zerodha may give long-term delivery investing for free, but it earns substantial money from people who actively trade intraday, futures and options.
2. Margin Trading Facility: Interest Is Now a Major Revenue Stream
Zerodha’s Margin Trading Facility, or MTF, has quickly become one of the most important new parts of its business model.
MTF lets a customer buy eligible shares by paying only part of the purchase value. Zerodha funds the remaining amount. The customer then pays interest on the money funded by Zerodha.
For example, suppose Neha wants to buy eligible shares worth Rs 1,00,000. If she contributes Rs 30,000 and Zerodha funds Rs 70,000, interest is charged on that Rs 70,000 funded amount until the MTF position is closed.
Zerodha currently charges 0.04% per day on the funded amount, which is Rs 40 per Rs 1 lakh per day. It also charges brokerage of 0.3% or Rs 20 per executed MTF order, whichever is lower. Pledge, unpledge and other applicable charges can also apply.
This produces something brokerage alone cannot always provide: recurring revenue for every day the borrowed amount remains outstanding.
The business has grown very quickly. In Zerodha’s August 2026 business update, Nithin Kamath said the MTF book had reached about Rs 9,000 crore and customers had borrowed roughly Rs 6,000 crore. He also said MTF now contributes about 10% of Zerodha’s revenue.
That makes MTF especially important at a time when Zerodha’s traditional trading brokerage has come under pressure. The company has said that MTF income is helping offset revenue lost after exchange transaction-charge rebates were removed and trading activity slowed.
3. Interest Income Beyond the Brokerage Fee
A stockbroker operates with large amounts of capital and regulated deposits because it has to meet exchange, clearing and margin requirements. This means Zerodha’s earnings are not limited to the Rs 20 fee visible on a trade.
Its latest reported numbers show interest income of around Rs 2,269 crore in FY2025-26. This broad interest line includes income linked to the capital and funding used in the brokerage business, with MTF now becoming an increasingly important part of it.
This does not mean Zerodha can simply take a customer’s unused trading balance and use it however it wants. Brokers operate under strict rules on client funds, settlements, margins and clearing obligations. The point is that a large, well-capitalised brokerage has significant financial assets and funding requirements around its operations, and interest-related income can therefore become a meaningful part of the business.
This is one reason Zerodha’s model is stronger than it first appears. A casual user sees a trading app. Behind that app is a large financial infrastructure business where brokerage, funding and interest income work together.
4. Demat Account Maintenance Charges
Another source of recurring income is the annual maintenance charge, commonly called AMC.
For new resident individual accounts, Zerodha currently offers the first year of demat maintenance free. From the second year, the charge depends on whether the account qualifies as a Basic Services Demat Account, or BSDA.
For a regular non-BSDA account, the current AMC is Rs 300 per year plus GST. Eligible BSDA accounts can pay less or nothing depending on the value of holdings.
This is not as exciting as trading revenue, but recurring account fees become meaningful when a company has crores of customers. Zerodha’s FY2025-26 annual maintenance charge income was reported at about Rs 180 crore.
In other words, even an investor who rarely trades can still contribute a small amount of recurring revenue through demat-account maintenance if the applicable AMC is payable.
5. DP Charges When Customers Sell Shares
A second demat-related charge appears when customers sell shares from their demat account.
Zerodha’s current DP charge is Rs 15.34 per scrip on a sell transaction. This includes the depository’s fee, Zerodha’s own DP component and GST. Zerodha’s own component is Rs 9.50 before GST under the current charge structure.
Suppose Kavita holds shares of two different companies and sells both. DP charges can apply for the securities debited from the demat account. These charges are separate from brokerage.
It is important not to treat the entire amount as Zerodha’s revenue because part of it goes to the depository and part is tax. But Zerodha’s own DP component creates another small source of income from its large customer base.
Zerodha has also highlighted that it charges this DP fee only once per scrip per day even if the customer sells the same share multiple times that day, rather than multiplying the charge for every sell order.
6. Other Service and Transaction Charges
Zerodha also earns smaller amounts from a range of optional or special services.
Examples include:
- Rs 50 additional charge for orders placed through a dealer under call-and-trade, including applicable dealer-assisted square-offs.
- Pledge and unpledge charges when securities are pledged for margin or other permitted purposes.
- Charges for certain corporate-action orders such as offer-for-sale, buyback, takeover and delisting requests.
- Charges for off-market demat transfers and some physical-document requests.
- A paid Kite Connect API plan for developers and businesses that need trading and market-data connectivity.
- Payment-gateway charges for certain ways of adding money, while UPI transfers are not charged that gateway fee.
None of these is likely to be as important as brokerage or interest income on its own. But at Zerodha’s scale, many small service fees together can add useful revenue.
7. Direct Mutual Funds Are Free – So Why Does Zerodha Offer Them?
This is an important part of understanding the Zerodha business model.
Zerodha’s Coin platform offers direct mutual funds without charging a distribution commission. The company also says there are no DP charges for direct mutual-fund investments on its standard platform.
So why provide the service if it does not directly produce brokerage?
Because not every product needs to make money immediately.
A young customer may join Zerodha only to start a monthly mutual-fund SIP. Over time, the same customer may buy stocks, trade occasionally, use MTF, pay demat charges, invest in bonds or use another Zerodha financial product.
Free direct mutual funds also help Zerodha keep more of a customer’s financial activity inside its ecosystem. The customer relationship may therefore be valuable even when the first product itself earns little or no direct revenue.
This is similar to a freemium model: keep important long-term investing services inexpensive, and earn from customers who choose higher-activity or funding-based services.
8. Zerodha Capital: Loans Against Shares and Mutual Funds
Zerodha also has a separate lending business called Zerodha Capital.
It offers loans against securities. Instead of selling shares or mutual funds to raise cash, an eligible investor can pledge those investments and borrow money against them.
The lending company earns interest on these loans. As of 2026, Zerodha Capital lists annual interest rates from about 10% to 11%, depending on the size of the loan. It also charges a processing fee and other clearly disclosed applicable costs.
For example, a customer with a large stock portfolio may need money for a business expense or personal requirement. Rather than selling investments, the customer can pledge eligible securities and take a secured loan. Zerodha Capital earns interest while the securities remain collateral.
This is still much smaller than Zerodha’s core broking business. Zerodha Capital reported around Rs 36 crore of revenue in FY2024-25. But it is strategically important because it gives the broader Zerodha group another way to earn from customers without depending entirely on trading volumes.
The loan money cannot be used for speculative capital-market activity. It is designed for genuine personal or business liquidity needs.
9. Zerodha Fund House: Asset Management Creates Another Revenue Stream
Zerodha has also moved from simply providing an investment platform to helping manufacture investment products.
Zerodha Fund House is an asset-management business backed by Zerodha and CASE Platforms, formerly smallcase. It focuses heavily on passive products such as index funds and ETFs.
The fund house said in April 2026 that it managed around Rs 15,000 crore across 17 funds and had more than 11.5 lakh investors.
Asset-management companies earn through the expense ratio charged within the funds they manage. Investors do not normally receive a separate monthly bill. Instead, permitted fund-management and operating expenses are deducted within the scheme before returns are reflected to investors.
This is different from Coin’s zero-commission distribution model. Coin may let users buy direct mutual funds for free, while Zerodha’s asset-management business can earn management-related fees on funds that it itself manages.
It gives the group another revenue source linked to assets under management rather than the number of trades customers place.
10. Why Zero Brokerage on Delivery Still Makes Business Sense
At first, giving away equity delivery brokerage may look like Zerodha is leaving money on the table.
But the strategy has helped build trust and attract long-term investors. Zerodha has kept zero brokerage on retail equity delivery since 2015, even though active trading remains the main source of broking revenue.
Think about a customer named Sandeep.
He opens a Zerodha account and buys long-term shares without paying delivery brokerage. Later, he starts making occasional intraday trades and pays brokerage. He may pledge shares, use MTF, pay an annual demat charge, or eventually use a loan-against-securities product.
The free delivery trade brought him into the ecosystem. The wider relationship creates several opportunities for Zerodha to earn over time.
Zerodha also spends very little on traditional advertising compared with many consumer-finance companies. The company says its growth has been driven heavily by word of mouth. Lower marketing costs help make the low-fee model more sustainable.
11. What Changed in Zerodha’s Revenue Model in 2026?
The most interesting part of Zerodha’s current business is that the revenue mix is changing.
Brokerage remains crucial, but it is no longer the only large engine. Regulatory changes reduced derivatives activity and ended the exchange transaction-charge rebates that brokers previously earned. Zerodha’s net transaction-charge income fell from roughly Rs 400 crore in FY2024-25 to zero in FY2025-26.
At the same time, MTF expanded rapidly and began producing recurring interest income. Zerodha says MTF now contributes roughly 10% of revenue.
Latest reported FY2025-26 figures include about Rs 2,738 crore of brokerage income, around Rs 2,269 crore of interest income and about Rs 180 crore of annual maintenance charge income. Profit after tax was about Rs 4,283 crore.
These numbers show the direction clearly. Zerodha is still a brokerage at heart, but funding, interest income and adjacent financial businesses are becoming more important as traditional broking faces regulatory and market pressure.
The company has also received approval in 2026 to enter merchant banking through a separate business. That could eventually add fees from activities such as IPO management and corporate advisory, but it is a newer business and should not be treated as a major current revenue source yet.
Conclusion
Zerodha makes money through a much broader model than the phrase ‘zero brokerage’ suggests.
Its biggest traditional source of income is brokerage from intraday, futures and options trading. MTF has become a major new source of recurring interest income. Demat maintenance, DP charges and other service fees add smaller revenue streams. The wider Zerodha group also earns through secured lending and asset management.
At the same time, Zerodha deliberately keeps equity delivery brokerage and direct mutual-fund investing free for retail individual customers. These services make it easier for people to join the platform, build trust and stay within the Zerodha ecosystem.
In simple words, the Zerodha business model works by keeping long-term investing inexpensive, earning from active trading and margin funding, and gradually building additional financial businesses around a very large base of investors.
