Groww, India's largest stockbroker by volume, has made a significant announcement that will impact its users interested in US stocks. The platform has decided to halt new investments in US stocks starting February 27th, 2024. This means individuals won't be able to buy new US stocks through Groww after this date. Additionally, the ability to add funds to their US dollar wallets will also cease.
However, there's an important caveat: existing holdings of US stocks are not affected. Users can continue to hold their current US stock investments and even sell them if they choose. They also have two options for the future of their holdings:
1. Withdraw their funds: Groww will facilitate the withdrawal of US dollars invested in US stocks. The deadline for initiating withdrawals has been extended to June 30th, 2024. After this date, withdrawals will no longer be possible.
2. Migrate holdings to another broker: For those who wish to remain invested in US stocks, Groww has partnered with two international brokers, Interactive Brokers and DriveWealth, to facilitate a seamless migration process. Users can transfer their existing US stock holdings to either of these platforms without incurring any transfer fees.
Reasons for the Shutdown:
Groww hasn't officially disclosed the specific reasons behind the decision, but market speculations point towards two main factors:
20% Tax Collected at Source (TCS): The Indian government introduced a 20% TCS on overseas remittances exceeding ₹5 lakh in a financial year. This tax, coupled with other international remittance charges, likely made offering US stock investment services less viable for Groww.
High operational costs: Managing US stock investments involves additional complexities compared to domestic stocks. These complexities likely led to higher operational costs for Groww, further contributing to the decision to shut down the service.
What This Means for Groww Users:
If you have existing US stock holdings in Groww:
You can continue to hold them or sell them if you wish.
You have until June 30th, 2024, to withdraw your US dollars invested in US stocks.
Consider migrating your holdings to another broker like Interactive Brokers or DriveWealth if you want to remain invested in US stocks.
