Demand and Call Loan Policy

Policy on Demand / Call Loans

Zerodha Capital Private Limited [“The Company”] may extend loan finance in the form of secured and unsecured, long term and short term to eligible borrowers, based on their pre-validation or approval by the Committee or the Board.

The Demand / Call Loans can be extended under Trade Advances, Loan against Shares or Securities or any other tangible assets etc. This would be reviewed from time to time by Credit Appraisal and Sanctioning authority/Risk Management Committee.

There has been keen competition amongst many players in lending and borrowing markets and products are evolved as per the customer requirements and benchmarked to offering by the competition.

This also depends upon the risk profile of the customer. The option for annulling and repayment of the loan is only with the customer and the company as a lender may not have any such option to call for early repayment except where default exists/Risk Presume and recalling option is exercised.

Demand/Call loans offer better flexibility to both customer and lender in handling the credit requirements. Keeping the benefits in view and in order to exploit the business opportunities the demand loans may open up and in order to offer better flexibility to both customer and the company in handling the credit requirements and giving option to the company to call back the loan on demand, the company intends extending demand / call loans as detailed out in the policy.

The policy is prepared in compliance with RBI regulations namely Para 11 of the Non-Banking Financial Company - Non-Systemically Important Non-Deposit Taking Company (Reserve Bank) Directions, 2016 (“NBFC-ND-NSI Directions).

Aim and Objectives of the Policy

The aim of this policy is to lay down clear terms on loan tenure (if opted), interest, repayment, renewal etc relating to demand loan facility given to the borrower for purchase of shares and securities.

Criteria for Loans

Demand/call loans would be considered by the company both under secured loans as well as unsecured Loan segments.
The demand/ call loans can be considered under business loans, trade advances, inventory funding, loan against shares & securities etc. This would be reviewed from time to time by Credit Appraisal and Sanctioning authority/Risk Management Committee.

Disbursement of loans including changes in terms and conditions

  • The Company will give notice to the borrower in in English, as confirmed to be understood by the borrower, of any change in the terms and conditions including disbursement schedule, interest rates, service charges etc. The Company should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard will be incorporated in the loan agreement.
  • Any Decision by the Company to recall / accelerate payment or performance under the agreement will be in consonance with the loan agreement.
  • The Company will release all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim the Company may have against the borrower, in case of secured loans. If such right of set off is to be exercised, the borrower will be given notice about the same with full particulars about the remaining claims and the conditions under which the Company is entitled to retain the securities till the relevant claim is settled/paid.


  • The Company will refrain from interference in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement (unless new information, not earlier disclosed by the borrower, has come to the notice of the Company).
  • In case of receipt of request from the borrower for transfer of the account, the consent or otherwise i.e. objection of the Company, if any, will be conveyed within 21 days from the date of receipt of request. Such transfer shall be as per transparent contractual terms in consonance with law.
  • In the matter of recovery of loans, the Company will not resort to undue harassment viz. persistently bothering of the borrowers at odd hours, use of muscle power for recovery of loans, etc. To avoid rude behavior from the staff of the Company, the Company shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner.
  • The company reserves the right to amend /alter /modify the codes as mentioned herein above and provide updates from time to time, not affecting/sacrificing the underlining spirit of the code. Such alternation/amendments may be displayed on the website of the Company from time to time for the benefit and information of the customer.
  • The Company shall ensure that any public promotional material is clear and not misleading. This Fair Practice Code shall also apply to sales associates / representatives of the company to the extent of their identification when they approach the customer for selling products personally.

Responsibility of Board of Directors

  • The Board of Directors of the Company have laid down an appropriate grievance redressal mechanism within the organization. Such a mechanism ensures that all disputes arising out of the decisions of lending institutions' functionaries are heard and disposed of at least at the next higher level.
  • The Board of Directors has laid down a mechanism for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management. A consolidated report of such reviews shall be submitted to the Board at regular intervals, as may be prescribed by it.

Credit Policy & Approvals – Loan Against Shares

Zerodha Capital’s main marquee product would be the Loan Against Securities product for it’s clientele for which the Credit Policy approval would be as stated in the following paragraphs. Zerodha Capital Private Ltd (“the Company) is a RBI registered Non-Deposit Taking Non-Systemically Important Non-Banking Financial Company, which primarily offers Loan against Securities facility to its clients. Client has to place collateral of 50 % depending upon the scrip (Group -1 Securities) and rest is funded by us i.e. the company. Group 1 securities shall be as referred in Paragraph 21 of NBFC-ND-NSI Directions and as amended from time to time. To put it simply, for example if the client is having scrip (Group -1 Securities) of Rs.1,00,000/-, then he can be funded Rs.,50,000/-.

Credit Policy guidelines are as follows:

  • The company shall conduct a due diligence on the creditworthiness of the borrower which will be an important parameter for taking decision on the application. The assessment would be in line with the company’s credit policies, norms and procedures in respect thereof.
  • The borrower would be informed in the vernacular language or in a language as understood by the borrower by means of sanction letter or otherwise the amount of loan sanctioned. The said letter shall contain the terms and conditions including the annualized rates of interest and method of application thereof and shall obtain an acceptance from the borrower on the said sanction letter.
  • The Company shall make available a copy of the loan agreement on the Company’s website under the personalized login of the client, along with a copy of all enclosures quoted in the loan agreement to the borrower at the time of requisition by borrower or brief terms should be made part of sanction letter. The company shall ensure that the loan agreements and enclosures furnished to all borrowers contain the terms and conditions and the rate of interest in the form of a term sheet, which shall be annexed to the loan agreement.
  • Limit is set after reviewing client’s financial background, client’s holdings in his Depository Participant account, a credit score from one of the 4 Credit Bureaus / Credit Information Company’s in India, and such other financial documentation proof provided by the client. Information from his KYC Application will also be used which is received during onboarding of the client. The KYC / AML Policy shall always be in line with this Demand Call Policy, and both will be subject to change from time to time.
  • Credit appraisal memo shall be prepared for every new client and same shall be taken into consideration at the time of finalizing limit.
  • For a prospective client, the Company shall do a diligence with respect to Credit Information Companies or any such other watch out Investors lists provided by RBI, any Government Authority or any other institution of which the Company may be a member of, the Company will at it’s sole discretion decide whether to provide a loan or not.
  • Risk Categorisation shall be done based on financial documents provided, depository participant account holdings and any such other assets owned by clients. The Risk Categorisation shall also be done based on the Credit Limit received by the client based under the points under Point “d” above. The KYC/AML Policy shall always be in line with this Demand/Call Loan Policy.
  • Physical instruments, such as undated cheques from the client’s bank account, may be collected by the Company from the borrower / client in advance for security purposes that can be utilized in case of any default.
  • On monthly basis, interest payment shall be traced of each client. In case of non-payment, it shall be informed to the management and accordingly action shall be taken.
  • Enhancement shall be done only after reviewing client’s past history which includes interest repayment on timely basis.

Sanction Process

For availing the sanction facility, borrower shall execute the Master Loan Agreement and other necessary documents, declarations, Power of Attorneys (if any) as may be required in respect of the sanctioned facility. The Credit and Sanction Authority will carry out the credit appraisal of documents and then facility will be sanctioned as per the set sanction process.

Tenure and Call back of loans

The Company will treat all personal information of the borrowers as private and confidential (even when the borrower is no longer a customer). The Company will not reveal transaction details of the accounts to a third party, including to group entities, except under following circumstances:

  • The demand/call loan will be sanctioned for a period of one year from the date of sanction of the loan in case of Demand Loan Facility or as per the terms agreed between the company and the borrower.
  • The sanction Committee shall record specific reasons in case the tenure of loan for any client is beyond the period of 12 months from the date of sanction.
  • In case no call / demand is made prior to the expiry of stipulated period, then the loan shall be deemed to be called/ demanded on such expiry date and shall be repaid accordingly.
  • Suitable clause empowering such demands/ calls made for repayment would be incorporated in the loan agreements.
  • The mode and authority of making the demand or call for repayment of the loan would be as decided, documented and adhered to.

Interest Rates

  • Interest rates will be determined as per the trends prevailing in the market, amounts of money that it can bring in by itself, and as per the company’s cost of borrowing.
  • The interest would be applied on monthly basis. Generally the interest should be serviced on monthly basis. The interest will be collected by the company on a monthly payment basis which shall be specified in the terms and conditions of the agreement. Any amount collected above the interest amount would be adjusted towards the principal amount.
  • Interest run will be done on a monthly basis
  • Monthly outstanding balance will be inclusive of interest.
  • Posting of interest run is done on Last day of the respective month which shall become due and payable by the 7th of the next respective month.
  • Demand / call loans may be considered on fixed interest rate basis pegged to any anchor rate as may be agreed upon. Interest rate would be decided on case to case basis. Any changes in the interest rates considered for calculation of interest amount will be notified to the customers immediately.
  • Any variation in the rate of interest shall be notified to the customer from time to time and shall be effective from such date as may be intimated by the company.

The rationale for charging different rate of interest (i.e. premium/discount over the reference rate) shall depend on the risk gradation of the client, tenure of the loan and type of the loan. The approach for gradation of risk is based on factors such as borrower profile, available security, client’s reputation/positioning in the market, past track record, financial standing, etc. Applicable rate of the interest will be on annualized basis and payable as per the agreed terms.

Review or Renewal of Loans

  • The demand loan facility would be due for renewal at the expiry of the loan tenure as specified at the time of loan sanction. The renewal of the loan facility would be at the sole discretion of the lender.
  • The renewal of the Demand Loan Facility as aforesaid shall be on the same terms and conditions unless otherwise agreed by both parties agreeing to new terms and conditions.
  • At least 7 (Seven) days prior to the end of the stipulated period, the loans would be reviewed to decide on whether demand / call should be made on due date or further renewal of the loan either in full or part to be considered for any period, not exceeding 12 months. The same shall be documented.
  • In case the loan is renewed, then it should be considered as a new demand / call loan although the same may continue under same customer/ loan account number. Necessary renewal papers would be obtained.
    Maximum amount for each of the demand/ call loan and the aggregate amount of the demand / call loan would be subjected to a review periodically, at least annual basis, by the Credit Appraisal and Sanctioning authority/Risk Management Committee.

Loan Repayment

  • The loan amount shall become payable on the expiry of the loan term or as demanded by the lender before the expiry of the term loan.
  • The loan shall be repayable unconditionally on demand at the lender’s discretion and without giving any reasons whatsoever.
  • The loan can also be paid by the customer at any time before the expiry of the loan period and no pre-payment charges shall be applicable.
  • In case the loan is renewed, then it should be considered as a new demand / call loan although the same may continue under same customer/ loan account number. Necessary renewal papers would be obtained.
    Maximum amount for each of the demand/ call loan and the aggregate amount of the demand / call loan would be subjected to a review periodically, at least annual basis, by the Credit Appraisal and Sanctioning authority/Risk Management Committee.

Classification as Non Performing Assets (NPA)

In case the interest is not serviced on due date or the loan is not paid off after being called up / demanded, then the loan would be treated as Non-Performing Asset (NPA) if such overdue status continue for more than 6 months from such date and would be provided for according to the policy of the company. The borrower wise NPA classification would also be applicable although no call or demand is made for any particular loan.


Margin shall comprise of cash and/or collaterals, as per the Approval List / Group – 1 Securities after applying the haircut percentage as per the scrip category as per the Risk Policy of the company or as per the special margin approved for the client. This Approved List of Group 1 Securities shall be available on the website of the Company at all times, and is subject to change at the discretion of the Company from time to time. This list may be modified by the Company with prior notice which may be immediate and extremely short in nature due to the nature of the volatility of the markets.

Loan Agreement will override policy

This policy will be not be overwriting any of the terms and conditions given in the agreement including schedule of terms. In case of any inconsistency, the terms given in the agreement will prevail.

This policy will be reviewed on periodical basis and revisions, if any, will be carried out after approval of Board of Directors / Committee authorized by it as the case may be.

This policy should always be read in conjunction with RBI guidelines, directives, and instructions. The company will apply best industry practices so long as such practice does not conflict with or violate RBI guidelines. In case of conflicts, the RBI guidelines will have overriding effect.