Brokerages lure investors with lifetime offers

In a move to lure retail investors at a time when they’re shying away from the volatile equity markets, domestic brokerages have begun coming up with a lifetime prepaid product, offering flexibility to customers.

India Infoline (IIFL) on Friday came up with a ‘Life time prepaid, anytime money back’ brokerage product, with prepaid brokerage beginning from Rs 10,000.

“While customers will enjoy commitment from us for reduced brokerage charges for as long as they choose, we will refund the unutilised brokerage any time the customer so chooses”, said Nandip Vaidya, president, retail broking, IIFL Group.

Similarly, plans available at ICICI Securities are between Rs 25,000 to Rs 1 lakh. These plans offer an upfront reduction in brokerage across all equity and derivative products, along with life time validity.

“With the prepaid brokerage, the customer can enjoy reduced brokerage across equity (cash as well as derivatives) commodities and currency markets,” said a note from IIFL. It added that actual brokerage would be adjusted against the prepaid brokerage on a daily basis. “While the customer can enjoy the benefits of substantially lowered brokerage against the prepaid scheme for a lifetime, he can withdraw the prepaid amount anytime he chooses,” said the note.

The reduced brokerage rates also include depository charges. This way, the customer is not tied into the scheme for a long duration. When the customer chooses to withdraw, he will be refunded the unutilised prepaid brokerage after adjusting for the normal brokerage charges.

According to Vishal Gulechha, head, equity products, at ICICI Securities, “Large investors in the market need to optimise their transaction costs, with flexibility to be in the market timing of their choice. With a prepaid plan, upfront reduction in brokerage and a near lifetime validity, it will cater to the said set of customers.”

Customers availing these plans will have free access to the equity advisory desk through an equity advisor. In the case of ICICI Securities, life means a tenure of 15 years. “Any unutilised brokerage post the validity period is refunded to the customer,” said a note from the brokerage house.