IBA, banks plan to increase startup funding
1 min read 28 Mar 2023, 10:53 PM ISTSome lenders have set up specialized teams to assist startups in moving funds to their branches in the Gift City
PremiumThe Indian Banks Association (IBA) has started working with banks to cater to the financing needs of startups following the Silicon Valley Bank (SVB) crisis. In its first meeting on Tuesday, the association discussed ways to expand the banking industry’s outreach programme for startups, said a top executive.
This follows finance minister Nirmala Sitharaman’s meet with public sector banks for reviewing their performance on various financial parameters amid global uncertainties.
In the meeting, Sitharaman also asked public sector banks to be watchful of global developments and take measures to protect themselves against any financial shocks.
“Banks are setting up branches for startups. The finance minister has asked IBA to work on how to create products and services for startups. We will offer a blended product for equity and debt. One way is that banks will invest in venture capital funds," said chief executive of IBA, Sunil Mehta.
In early March, Mint reported that Axis Bank, Kotak Mahindra Bank and ICICI Bank, along with the Indian unit of HSBC, had built crack teams to assist startups affected by the Silicon Valley Bank crisis, and open new dollar accounts in the Gift City in Gandhinagar in Gujarat. The lenders have set up specialized teams to assist startups in moving funds to their branches in the Gift City following the lifting of the transaction freeze at SVB.
ICICI Bank too said that it set up a dedicated team to help the startups move their funds from SVB.
“IBA is considering a common outreach programme for banks to reach out to startups by creating nodal banks, appoint nodal officers and create a platform for banks and customers to meet. Banks are looking at offering activities like transaction banking, advisory on taxation, etc," said a banker seeking anonymity.
Majority of startups, which were affected by the SVB crisis include India’s software-as-a-service startups which have a large customer base in the US, and those backed by Y Combinator (a US accelerator).
