Zerodha Coin to Launch Digital Fixed Deposits in Partnership with Blostem

Zerodha's investment platform, Coin, will soon offer Fixed Deposits (FDs) to its users. This new service is being developed in collaboration with Blostem, a New Delhi-based fintech startup that has already raised approximately $1 million in funding. Rainmatter Capital, the investment arm of Zerodha's founders, will also lead a subsequent funding round for Blostem as part of this formal partnership.

The digital FDs will allow customers to open them without requiring a savings bank account with the financial institution providing the FD. These deposits are expected to be primarily offered through Small Finance Banks, which typically provide higher interest rates compared to larger commercial banks.

This expansion aligns with Zerodha's philosophy of separating active trading (Kite) from passive, long-term investments (Coin). Coin currently facilitates commission-free direct mutual funds, Systematic Investment Plans (SIPs), and the National Pension Scheme (NPS), managing assets worth Rs 1.6 lakh crore. The introduction of FDs aims to broaden Coin's range of low-risk, fixed-income investment options for users seeking to "put money and forget."

The fintech sector is seeing increased interest in FD offerings. Startups like Stable Money and platforms backed by major entities such as Flipkart (super.money) are also expanding in this digital FD space.

Impact This launch could increase competition in the digital Fixed Deposit market, potentially driving better rates and user experience for consumers. For Zerodha, it diversifies its product suite and reinforces Coin's position as a comprehensive platform for long-term wealth accumulation, potentially attracting new users or increasing engagement from existing ones. Impact Rating: 7/10

Difficult Terms: Fintech: Financial Technology. Refers to companies that use technology to provide financial services, often in innovative ways. Fixed Deposits (FDs): A financial instrument offered by banks and NBFCs that provides investors with a fixed rate of interest for a specified period. Small Finance Banks: A type of niche bank in India licensed by the Reserve Bank of India to provide financial services to unserved and underserved sections of the population. They often offer higher interest rates. Assets Under Management (AUM): The total market value of all financial assets managed by an investment firm or individual on behalf of clients. Systematic Investment Plan (SIP): A method of investing a fixed amount of money at regular intervals, typically in mutual funds, to average out the cost of investment. National Pension Scheme (NPS): A government-backed retirement savings scheme in India that allows subscribers to invest in a mix of equity and debt to build a corpus for their retirement. Rainmatter Capital: An investment firm associated with the founders of Zerodha, focused on supporting fintech startups.