Technology Startups

India's Largest Bank is Now Looking at Startups & Has a New Policy in Place

The IT Innovation Start-up fund, an INR 200 crore corpus with an initial outlay of INR 50 crore, was launched by the then SBI Chairman Arundhati Bhattacharya in June 2016.
India's Largest Bank is Now Looking at Startups & Has a New Policy in Place
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Entrepreneur Staff
Senior Correspondent, Entrepreneur India
3 min read

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After working with nearly 150 startups from domains like chatbots, data analytics, the blockchain technology, etc and hosting around five hackathons, the country’s largest lender State Bank of India (SBI) has failed to park any investment from its INR 50 crore fund which was embarked to support Indian fintech companies.  

The IT Innovation Start-up Fund, an INR 200 crore corpus with an initial outlay of INR 50 crore, was launched by the then SBI Chairman Arundhati Bhattacharya in June 2016. The mindset behind the fund was to invest up to INR 3 crore in an Indian tech startup working with banking or related technology.

As per PTI report, SBI Chairman Rajnish Kumar acknowledged that investing in a startup is a risky and hence, there is need of a new approach.

"We are a public institution and investments in startups are generally considered very risky. We understand that traditional way of investing will not work," he said.

However, the bank also asserted that the bank is keen to play an active role in developing the fintech ecosystem in the country through collaboration and looking to create companies like Ola and Flipkart. Having said that, Kumar also hinted at a new policy to support the fintech sector, which is approved by the bank’s board and has passed through regulatory authorities such as Central Vigilance Commission.

Meanwhile, in order to promote some of the new age technologies-based innovation, SBI is also planning to invest INR 25 crore to set up a collaborative innovation centre near Mumbai

Sunny Side Up

However, on the other side, a majority of private banks have not shied away from participating in India’s entrepreneurial growth story.

For example, AXIS Bank has been an active investor in MSwipe’s fundraising activities and the bank has participated in the startup’s three key investment rounds (series A, B, C).

Additionally, along with Axis Bank, The Ratnakar Bank, Yes Bank and DBS with others, invested around USD 10m in Coin Tribe, an online lending marketplace for small and medium enterprises (SMEs). The round was led by Sabre Partners in March 2018.

Even though SBI has been in the forefront of adopting new age technologies and has pioneered some of the notable projects such as the Bank Chain with collaboration Prime Technologies, the reasons to not finding a single appropriate investee company is best known to country’s largest lender.

Going forward, considering the increase in the of bank-fintech companies collaboration both as an investor and partners, all eyes are glued are SBI new fintech policy to see how the bank is planning to minimise risk and maximize its exposure.

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