The Department for Promotion of Investments and Internal Trade (DPIIT) is in discussions with the Indian Banks Association (IBA) on ways to get banks to reach out to Indian start-ups to understand their financial requirements and help improve penetration of branches across sectors and cities, said a senior official.

The government has also allayed fears of a possible start-up funding crunch in India, following the collapse of the Silicon Valley Bank, as programmes such as the start-up fund-of-funds, credit guarantee and seed fund schemes, were providing resilience to the eco-system.

“We have had talks with IBA so as to take proactive steps to reach out to Indian start-ups, understand their financial requirements, to understand how to improve the penetration of their banks and their branches across different sectors, different cities and in different tier two and tier three towns as well. IBA has also started doing intensive workshops across different states and Union Territories in the country,” said Manmeet Nanda, Joint Secretary, DPIIT, at a media briefing on Tuesday.

Nanda said the picture for start-up funding was not dim at all, as was being made out in some quarters, because there were robust funding schemes available domestically. “I have not seen a plunge in investments. We have the Startup Seed Fund and the Fund Of Funds scheme going on for last four years. We have recently operationalised the credit guarantee scheme that has been functional from April 1, 2023. So, I don’t foresee any kind of issue for our startups in terms of their financial requirements,” she said.

According to analysis shared by Crunchbase, the slowdown in venture and growth investments in private companies continued to slowdown in the first quarter of 2023. Global funding in the first quarter reached $76 billion, which was 53 per cent lower than $162 billion of funding in the first quarter of 2022.

Sharing details of India’s funding schemes, Nanda noted that the Startup India Seed Fund had approved ₹590 crore for about 155 selected incubators which in turn selected 150 start-ups. “As many as 55 per cent of these selected startups by the 155 shortlisted incubators belong to tier two and tier three cities,” she said.

The Fund Of Funds scheme, which provides finance to emerging startups through venture capital funds, has so far committed Rs 8,294 crores to 103 Alternate Investment Funds (AIFs) and a total of  Rs 14,828 crores have been injected in 818 startups. SIDBI is a partner and there is a regular assessment of  applications that keep coming in, Nanda said.

“We are hoping that this will further result in a multiplying effect and stabilise whatever issues the startup community may have felt,” she said.

The Credit Guarantee Scheme, which became operational from April 1 2023, has on-boarded 18 financial institutions already including RBI regulated banks, NBFCs and AIFs. “Loan sanctioning has already started and the process has begun for about four to five startups,” said Nanda.

In financial year 2022-23, the number of startups registered with DPIIT increased 40 per cent to touch a high of 29,000. “This is the highest number of registrations in a year. The total number of start-ups registered with DPIIT are now about 95,000,” she added.

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