The State Bank of India (SBI) and the Karnataka Digital Economy Mission (KDEM) have teamed up to support nascent startups in the state with collateral-free loans.
In a bid to help startups in need of start-up financial assistance, SBI and KDEM on Friday signed a Memorandum of Understanding (MoU) to leverage the existing Credit Guarantee Fund for Micro and Small Enterprises. (CGTMSE), set up by the Center to improve the flow of credit to the MSE sector.
Funding should not be a problem for startups and several funding options should be tapped, said Dr CN Aswath Narayan, Minister of Department of Electronics, Information Technology, Biotechnology, Science and of technology. “We cannot rely solely on FDI. Local resources must be used to their full potential,” the minister said.
As per the MoU, the CGTMSE will be used by the SBI to provide unsecured loans of up to Rs 2 crore to startups recognized under KDEM’s Elevate scheme.
SBI bets big on startups
Apart from the loans, the SBI will also set up an exclusive branch for startups near Koramangala here by August. Similar branches will be set up in Delhi and Mumbai, said Rana Ashutosh Kumar Singh, SBI’s deputy managing director, Transaction Banking and New Initiatives.
Secondly, the SBI will also set up a startup support desk at the existing K-tech center near HSR Layout in Bengaluru. Similar offices will be set up in the other three hubs being developed in Belagavi, Hubbali and Mangaluru under KDEM’s “Beyond Bengaluru” initiative.
Additionally, the SBI will also contribute to the Rs 75 crore equity cluster fund accumulated to develop the three hubs. The Karnataka government will invest Rs 25 crore.