MC EXCLUSIVE Zerodha to roll out Fixed Deposits on Coin app soon; ties up with Blostem

Zerodha to launch FDs on Coin app

Zerodha's Coin platform will launch Fixed Deposits (FDs) on the platform soon, Neelesh Verma, product head and assistant vice president, Mutual Funds and Fixed Income, told Moneycontrol.

The FD product is being launched in partnership with a fintech startup, Blostem, a New Delhi-based startup that has raised close to $1 million in funding.

Zerodha founders’ investment arm Rainmatter Capital will also lead a new round of funding in the startup, along with the formalisation of the partnership, Verma said. However, the quantum of the investment could not be confirmed.

Coin is a separate app from Kite, the direct stock investment and trading app of Zerodha. Coin is the primary platform for long-term investments, including Mutual Funds, insurance and the National Pension Scheme.

Blostem’s other investors include AC Ventures, mobile payments firm Mobikwik and Delhivery founder Kapil Bharti.

The fully digital process will enable consumers to open FDs without having to open a savings bank account with the same financial institutions. The FDs will most likely be with Small Finance Banks, which offer higher interest rates than commercial banks.

Coin platform lets consumers invest in commission-free direct mutual funds without any fees or platform/distributor commission. It is also Zerodha’s platform for the popular Systematic Investment Plan (SIPs) and has an Assets Under Management to the tune of Rs 1.6 lakh crore.

The Bengaluru-based discount broker’s idea behind FDs is to offer fixed-income products along with low-risk long-term investment products on the Coin platform.

“Kite is the active investment platform, whereas Coin has been the passive investment platform, where consumers put money and forget, and come back to withdraw after a few years,” Verma said.

According to Verma, most investors indulge in panic or impulse buying and selling often, and a segregation of long-term and short-term investments is a good way to maximise returns.

“This is one of the reasons why we have Coin as a separate app for SIPs, NPS and mutual funds, even though most other wealth-tech startups tend to offer it on the same app. This limits our growth through cross-selling, but that is Zerodha's way of doing this,” Verma added.

Moneycontrol was the first to report on October 27 that Zerodha will launch US stock investment next quarter.

The flurry of new product launches comes even as the company reported a decline in revenue and net profits for the first time in over a decade.

The FD space is attracting heightened interest from startups as well as the venture capital industry. A fortnight ago, Moneycontrol reported that Peak XV Partners is set to lead around $25 million funding round in wealthtech startup Stable Money.

Zerodha founders’ investment fund Rainmatter-backed smallcase and WintWealth also offer FDs on the platform, although FDs are not their primary product. Flipkart-backed super.money also offers digital FDs on its platform.