BackBanks plan to come up with separate rating framework for risk profiling startups, says report
In a bid to boost credit disbursement, banks are mulling over to form a separate rating framework for risk profiling of startups
PremiumIn a bid to boost credit disbursement among startups, banks are reportedly planning to come with with separate rating framework for risk profiling startups.
For the creation of separate model, they have also begun discussions with concerned stakeholders including rating agencies, government and bank regulators, according to Economic Times report.
The move will help in increasing the role of banks in financing startups. However, the government is also launching schemes to ensure better financing of startups.
In the formation of rating framework, formal suggestions from the Reserve Bank of India will also be taken, reported ET.
A common rating model will help in reducing the time of clearing loans and ensure timely credit disbursement. A separate framework will also help in assessing the viability of startup funding, as earlier startup were included in MSMEs only. It will also help them in identifying the drawbacks and advantages of funding a particular startup.
With the rising number of increasing number of startups, it has become extremely important for the government to bring new measures to ensure easier financing for these entities. India is the home to third largest startup ecosystem in the world.
From startup specific schemes to subsidies, Indian government is striving to build a favourable environment for startups in the country. There have been several steps taken to increase sources of startup funding. As a positive outcome, funding to India's startups was increased by 15 per cent in September from a year earlier.
According to the latest data compiled by Venture Intelligence, startups raised around a billion dollars in September this year across 41 deals. The number rose from $858 million raised across 91 deals in the same month of last year. The main reason behind the rise in overall investment was the finalisation of three deals of more than $100 million each.
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