State Bank of India (SBI) has decided to float dedicated branches to offer collateral-free financial assistance upto ₹2 crore to start-up entrepreneurs in the country.
To start with, the PSU bank has entered into a memorandum of understanding with Karnataka Digital Economy Mission (KDEM), a body which has a mandate to grow the size of the state’s digital economy, to open its first exclusive branch for entrepreneurs.
Under the MoU, SBI would be able to offer financial support to start-ups that are recognised by the state government and supported by KDEM. Karnataka already has over 750 start-ups under its Elevate Scheme while over 1,000 ventures are expected to be supported through this MoU, said officials at a media conference here on Friday.
Unleashing underutilised funds
Rana Ashutosh Kumar Singh, SBI Deputy Managing Director (transaction banking & new initiatives) said this move was aimed at unleashing the potential of unused funds that were lying in the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME).
“CGTSME is underutilised. We are trying to design a product for start-up assistance to make it more focused and effective. We are starting it with Karnataka, the start-up capital. We will shortly announce the name of the initiative and further details,” said Mr. Singh.
CGTMSE is a scheme set up jointly by the Ministry of Micro, Small & Medium Enterprises, Government of India and Small Industries Development Bank of India to catalyse flow of institutional credit to Micro and Small Enterprises.
SBI will open its first exclusive start-up branch at Innovation Tower, at HSR Layout, in Koramangala, Bengaluru. Subsequently, KDEM will help the bank open more such branches in Mysuru, Mangaluru, Hubballi and Belagavi.
Mr. Singh further said it would be a country wide initiative of the bank and start-up exclusive branches were being planned in Delhi-NCR, Mumbai, Ahmedabad, Hyderaband and Chennai and in other cities. “However, for the first six months, our focus will be on Karnataka,” he added.
Minister assures financial support
Speaking on the occasion, Ashwath Narayana, minister for IT, BT & S&T said, his government would do whatever it takes to ensure entrepreneurs with bright ideas access to funds. “Finance should not come in the way of growth for any entrepreneurs. They always need not depend on FDIs, other funds are there too. We will make sure they get financial support,” the minister promised.
The state is currently in the process of setting up Cluster Seed Fund, a new fund to support start-up growth in three clusters: Mysuru, Mangaluru and Hubballi.
KDEM Chairman B.V. Naidu said, “Each of these clusters will have access to a pool of ₹25 crore. Some 20% of these funds will come from the state government, 30% from local entrepreneurs and the rest will be from SBI.”
