Debt finance

State Bank of India Explores Ways to Debt Start-ups

The State Bank of India said on Wednesday it was trying to find a way to debt finance start-ups because current rules allow banks to finance only profitable businesses.

Start-ups raise funds to run their businesses and promoters are forced to dilute their stake because debt financing is not available to the sector because they are in deficit in the early years, a senior bank official said.

We find it difficult to get into debt to finance start-ups. Banking standards and rules allow debt financing to the most profitable. As at the beginning, the startups are loss making, they must be financed according to the viability of the idea only. We are trying a way out, said Ashwini Kumar Tewari, Managing Director of SBI – International Banks, Technology and Subsidiaries, at the Chamber of Bengal annual general meeting.

He said the bank was doing equity financing through a subsidiary SBI Ventures and acknowledged that the country needs to support the start-up culture.

The number of start-ups recognized by the government as part of the “Startup India” initiative launched by Prime Minister Narendra Modi in January 2016, has increased by nearly 85. Their number has increased from 504 in 2016 to 42 733 startups in total in 2020, according to data from the Ministry of Commerce. 9231695003

Speaking on the economy, Tewari said despite a healthy recovery, the country’s growth will be lower than 2019 due to the pandemic.

Big companies are doing well. The problem lies with SMEs and the small sector. Large companies reimburse more. Credit growth is driven by retail, he said.

Referring to gold loans, he said that they are not popular in India but there are many that indicate the pain that normal people have suffered. “If the gold lending goes up, it’s good for business, but it’s also a sign of the helplessness of normal people,” Tewari said.

The Bengal Chamber has launched its Daytime Ease of Doing Business app for industry stakeholders. Subscribers and non-members alike can now learn about and benefit from the Chamber’s experts in various fields.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

Dear reader,

Business Standard has always strived to provide up-to-date information and commentary on developments that matter to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these difficult times resulting from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative views and cutting-edge commentary on relevant current issues.
However, we have a demand.

As we fight the economic impact of the pandemic, we need your support even more so that we can continue to provide you with more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of providing you with even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital editor