Today I received some amount which I withdrew from zerodha yesterday. In the confirmation mail I noticed that the money was send from yesbank. Now I assumed that Zerodha is now using yesbank as a banking partner for their banking services need. So because of yesbank dark history I somehow don’t trust them fully. So one question came into my mind that, if zerodha using yesbank as a banking partner then our money lying in zerodha ac is also lying with yesbank. So if yesbank goes bankrupt in future what will happen?
I know individually 5lakh is the highest insurance provided by rbi subsidiary for individual customer but I don’t know clearly what is the rule for corporate business accounts (Zerodha in this case).
Is it same 5lakh for corporate account as well? Any light in this topic will be very knowledgeable. @nithin
We use Yes bank currently for processing withdrawals along with HDFC Bank. We will probably end up using more of Yes bank going forward because they are processing withdrawals much faster than other banks. The balance that we maintain with the Yes bank account is only equal to what is being requested for withdrawal from customers. So there isn’t any risk as such.
Ok but I want to know about the 5 lakh credit insurance by RBI subsidiary. Is it same for corporate accounts or there is other rules? Please answer if you know this information.
I am extending this statement for other businesses too, that are associated with your business.
Giving example of Yes bank only. Last year when the bank was placed under moratorium, and withdrawals were restricted for a while, I remember PhonePe had stopped working because it was backed by Yes bank for the UPI transactions. PhonePe was the third most popular wallet app that time.
You know the ripple effect of it? All telecom operators had to immediately stop the “recharge nudge” campaigns offering discounts while recharging through PhonePe.
So there is indeed a concentration risk with corporates, and repercussions, if one fails.
To answer your specific question, you need not worry about your dues from zerodha. If in this example, yes bank goes bankrupt, Zerodha is responsible to meet your commitment and your dues will have to be paid from their other banking sources. Zerodha will then follow up with yes bank to get their money. Just like you are worried about the money with yes bank, Zerodha will be million times more worried as they have commitment to the general public. Their risk department would have set rules as to which bank should have what amount. No Company in the world will work on one bank system.
You need to worry only when you place your money with yes bank . When you place your money with yes bank, you are covered upto 5 lacks as insurance in case the bank is wound up.
Hope this clears your doubt.
To come back to yes bank. This bank was in trouble and now out of it. To give you peace of mind, you should know that none of the depositors lost money. SBI and other private banks came in and rescued it. They are cleaning up the act and I am sure will do well. As a shareholder we lost value but glad our equity was not wiped out like the AT1 bond holders who lost everything.
I also believe Bank will not go bankrupt so easily but I was thinking of extreme bad situations. It feels good after knowing that Zerodha working with multiple banks so the risk is low.
I know Zerodha will be responsible but if Zerodha work with one bank and that bank goes bankrupt it will hurt them directly and also it will hurt users indirectly because our money is gone. We can’t do anything except blaming Zerodha in that time. That’s why I asked the question. Although despite that we will get up to 25 lakhs from IPF.
What I meant was the business has to fend for themselves. There is no protection a business owner gets for accounts maintained with a bank.
but I think government should rethink about this. This is a serious issue.