Banks Do Their Bit To Solve Startups' Operational Issues

While recent initiatives are ironing out some of the issues that often crop up in retail banking, the more pressing expectations of the country's startups likely concern the ease of fundraising

By Soumya Duggal


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A flurry of initiatives aimed at providing a seamless retail banking experience to Indian startups have emerged on the scene in recent time.

Private sector lender ICICI Bank is the latest to hop onto the bandwagon with its launch of 'Startup Ecosystem Banking'—a startup proposition including lending solutions, treasury and transaction banking solutions, digital integrations, handling FDI and regulatory compliances, and personal banking services for founders and staff.

"At ICICI Bank, we offer improved convenience to these new-age businesses through agile and technology-led solutions across their life stages," said Rajesh Rai, business head, West and South, branch banking, ICICI Bank. "Through our comprehensive 'Startup Ecosystem Banking', we support the emerging requirement of Indian startups and aim to become the preferred bank of choice in their growth journey," he added.

The announcement followed the State Bank of India (SBI) inaugurating its third specialised branch for startups at Gurugram last month to provide end-to-end support at every stage of their journey, from inception to IPO and FPO. Apart from regular banking services to startups, the branch will also act as a one stop shop in providing investment banking, treasury/forex, advisory and other ancillary financial services through the bank's subsidiaries, said a statement, adding that the bank would also cater to the requirements of private equity (PE), venture capital (VC) and Alternative Investment Funds (AIFs). SBI's other two specialised branches for startups were opened in Bengaluru and Chennai in August 2022 and January 2023 respectively.

While such initiatives might have ironed out some of the issues that often crop up in retail banking, the more pressing expectations of the country's startups likely concern the ease of fundraising. According to Prasad Sreeram, the CEO and co-founder of intra-city logistics platform COGOS Technologies, the startup did receive some initial support (including the relaxation of certain limits) from private sector banks such as Yes Bank, but securing working capital still remains a challenge. "The government did introduce Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), but we couldn't benefit much from it in terms of financial advantages. Being an IT and tech-led company, we are hoping for integration with banking services at reduced rates, especially concerning the initiation and reconciliation of payments through API. We are already in conversation with a few PSU banks for such an assistance," said Sreeram. "Once banks start treating us as their portfolio startups rather than customers, they'll help us connect with other business partners, allowing us to tap the ecosystem better. We are hoping this is what the SBI startup initiatives will facilitate," he added.

Nevertheless, Indian private and public banks are beginning to work on facilitating a greater deployment of capital in the startup ecosystem, albeit through baby steps. For instance, in December last year, HDFC Bank, which is the country's largest private sector bank by assets, launched its sixth annual grants program in partnership with centre's flagship initiative 'Startup India' to build capacities of social impact incubators and startups working in tier-II and III cities as part of its CSR activities. In June, foreign lender HSBC India announced that it would lend $250 million to high-growth, tech-led startups.

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