PSU banks focus on expanding start-up branch network – Banking & Finance News

Public sector banks (PSB) are increasingly focusing on opening more start-up specialised branches as they receive government incentives including credit guarantee while funding such entities, senior bankers told fe.

Bank of India, for instance, opened 3 startup branches in Mumbai, Bengaluru and Delhi last month and is aiming to open another 10 branches during the next year, said Rajneesh Karnatak, MD & CEO.

A official at Bank of Baroda said the lender has opened 11 startup branches already in recent years and is granting startups modified packages as per their requirements which includes certain concessions in terms of lower interest rates, foreign currency current account, dedicated relationship managers, corporate premium credit cards, among others.

Even the country’s largest bank has been ramping up its start-up branches.  SBI Chairman Dinesh Khara said in the bank’s FY23 annual report that the lender has opened specialised start-up branches at Bengaluru, Mumbai, Gurugram and Chennai to offer one-stop solutions to Start-ups.

“Your Bank is actively looking to partner with agri-techs and start-ups to cater to the financial needs across the agriculture value chain. Your Bank has opened specialised Start-up branches at Bengaluru, Mumbai, Delhi and Chennai to offer one-stop solutions to Start-ups,” Khara said.  

Startups are being funded under the Centre’s Department for Promotion of Industry and Internal Trade (DPIIT) Startup India initiative. “As per the policy of government of India, there are three incentives over there (for startups). One is equity infusion which is going to the startups, second is the income tax benefit and number three is credit guarantee,” Karnatak said.

Under the scheme, the bank is getting credit guarantee of up to Rs 100 million per borrower entity. The bank is also focusing more on increasing funding for startups as it increases the number of micro, small and medium enterprises (MSME), creates entrepreneurs enabling higher self-employment and more jobs, Karnatak said.

He said that that they have already sanctioned 7-8 accounts during the first day itself and plans to have another 10 branches during the next 12 months.

According to a release issued by the Ministry of Commerce & Industry, the Centre had operationalized the Credit Guarantee Scheme for Startups (CGSS) on April 1 and as of June 30, a total of 10 guarantees have been extended to startup entities in Delhi, Haryana, Kerala, Madhya Pradesh, Maharashtra and Uttar Pradesh amounting to Rs 304 million. The release said that 98,119 startups have been recognised under the startup India initiative of the Centre as on April 30. Maharashtra with 17,981 start-ups is the state with the largest number of recognised startups followed by Karnataka with 11,080 start-ups and Delhi with 10,812 startups.  

Indian Bank, meanwhile, launched 10 startup cells across Ahmedabad, Bengaluru, Chennai, Coimbatore, Delhi, Gurgaon, Guwahati, Hyderabad, Kanpur and Mumbai earlier this month. The lender is offering a bouquet of tailor-made banking products and services designed specifically for start-ups which includes offering payment gateways, corporate credit cards and credit facilities apart from other existing products of the bank.

The bank has formulated customised loan product called ‘IND SPRING BOARD’ for meeting credit requirement whether it be working capital or growth funds for start-ups. The PSB said it has also entered into strategic collaborations with educational institutions such as IITs, IIMs and other start-up incubation cells.

“The launch of the startup cells is a major milestone in Indian Bank’s journey to support the growth of the startup ecosystem in India,” said, S L Jain, MD & CEO at Indian Bank. The start-up branches will also have dedicated relationship managers, who would partner with start-ups and build lifecycle engagement with them.

“The startup ecosystem is growing very fast in India with many startups taking shape and entrepreneurship being given a boost by government also. As a banking system too, we need to have some mechanism to support MSME to grow and a lot of these startups are MSMEs,” a senior official at Bank of Baroda said.