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Kotak’s new “Flat” plan…worth it?


Kotak has now introduced a Flat Plan, with a flat brokerage of Rs. 9 or Rs. 20 (the lower amount has a fee Rs. 500 a month)

One of the caveats is that the flat rate is multiplied depending on trade value. So if you are buying shares for delivery (as opposed to intra day trading) you will pay Rs. 9 (or Rs. 20) upto Rs. 5,000, Rs. 18/Rs. 40 upto Rs. 10,000 and so on.

Assuming you make a monthly purchase (or sale) of Rs. 1,00,000 worth shares for delivery, you would end up paying Rs. 400 (at Rs. 20 for every 5000 traded). The Rs. 9 option is more expensive at Rs. 680 since there is a 500 Rs. fee per month.

This translates to a brokerage of 0.4%, which is higher than what sites such as offer, but lower than those of sharekhan etc.

And 0.4% is only the minimum – even if you buy shares worth Rs. 5,001 you get Rs. 18 or 40, which is nearly double what you bargained for! (0.8%)

Flat rates are interesting, but in the financial world the only thing that matters is percentages. In the end you will have to divide your trade value by the amount you pay as commission to find out how much you lost in “overhead”, and the Kotak “flat” plan seems to have much more overhead than a regular percentage commission plan.


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