Bengaluru-based Groww has responded to criticism from Zerodha founder and CEO Nithin Kamath after he publicly questioned the rival platform's decision to introduce regular mutual funds through its subscription service, Groww Prime. The exchange, which played out on X (formerly Twitter) on Thursday, 9 July, has reignited a long-running debate in India's fintech sector over whether direct or regular mutual fund plans better serve retail investors.

What Kamath Said

Nithin Kamath posted on X that many platforms which had launched direct mutual fund offerings around the time Zerodha introduced its Coin platform have since 'disappeared or pivoted to something else.' He suggested remaining competitors are 'rethinking their choice of offering direct plans,' while reaffirming that 'Zerodha will continue to offer direct mutual funds for free.'

Kamath traced the roots of his pricing philosophy to 2010, when Zerodha pioneered the discount brokerage model in India. 'When we started the discount brokerage model in India in 2010, we decided to charge the same fee regardless of trade size. The logic was simple: if the effort to execute a trade is the same, why should customers pay differently?' he said.

He extended that logic to mutual funds, arguing: 'You can't call yourself a discount or a low-cost broker if you charge a percentage fee on transactions, because there's no incremental effort in executing a larger order.'

Groww's Expansion Into Regular Funds

Groww, one of India's largest retail brokers by active users, had until recently offered only direct mutual funds — a model it had championed as a low-cost option that eliminates distributor commissions and can generate better long-term returns. The platform has now expanded its product mix to include regular mutual funds under its subscription-based Groww Prime service.

The product was initially rolled out to a select set of users earlier this year before being made available to the company's full two-crore customer base. Regular mutual funds carry distributor commissions embedded in the expense ratio, making them more expensive than direct plans over the long run — a trade-off Groww has now chosen to offer alongside its existing direct fund options.

Groww's Response

Responding to Kamath's remarks, Groww said that Groww Prime provides mutual fund recommendations based on a customer's risk profile, investment horizon, and financial goals. 'It's completely optional and is meant for only those customers who need such recommendations,' the company said.

The response positions the regular fund offering not as a retreat from the direct-first philosophy but as an advisory layer for investors who seek guidance rather than self-directed investing.

Kamath Urges Investors to Check Their Holdings

Beyond the competitive sparring, Kamath used the moment to urge retail investors to audit their portfolios. He said Zerodha would assist customers who wished to switch from regular mutual funds to direct plans. The offer underscores a broader consumer-awareness push that discount brokers have made central to their brand identity.

What This Means for the Sector

The public exchange highlights a structural tension in India's rapidly growing retail investment market. Direct mutual fund platforms built their user bases on a low-cost, commission-free promise; pivoting to regular funds — even as an optional, subscription-gated feature — risks blurring that differentiation. Notably, this is not the first time a fintech player has faced questions about monetisation pressures as growth-at-all-costs gives way to profitability imperatives. How Groww navigates the optics of this pivot, and whether Zerodha's direct-only stance becomes a competitive advantage or a constraint, will be closely watched as India's mutual fund industry continues its retail expansion.