State Bank of India (SBI), the country’s largest bank, has planned to invest a Rs 200-crore fund to support start-ups in the financial technology (fintech) space.
This fund shall consider assistance of up to Rs 3 crore to an Indian registered company for promoting their business innovations using IT in India for banking and related technology. The ‘IT Innovation Start-up Fund’ will have corpus of Rs 200 crore
SBI Chairman Arundhati Bhattacharya said at a CII event in New Delhi.
The SBI chief also said the bank had formed a mentoring team to assist start-ups. It will support, monitor and make a report on the progress and utilisation of the funds. The team will facilitate and guide businesses, extending help in various areas, including additional funding, she added. Also, legal and financial assistance.
The bank had opened a start-up branch called InCube in Bengaluru this January. It functions as a single point of contact for start-up account holders for their various banking and financial advisory requirements.
This branch doesn’t give out money but helps start-ups to create a business plan, finds their legal requirements and helps with compliance and registration. It has about 200 clients. Bhattacharya said the bank was looking at cross-selling through collaboration with fintech companies, as banking could also benefit from fintech.
“There might be one or two areas where they can give us competition but, overall, there could be several areas where they can help cross-sell banks’ products,” she added.
She further said with the growing significance and interactions of fintech in the financial services space, there needs to be in place a suitable regulatory framework to address the associated risks, like technology risks, cyber- security risk, data-theft risk…cross-linkages and source of funds, among others.
According to a Nasscom report, there are close to 400 companies in India focused on the fintech market globally. In 2015, the investment in this space touched $1.2 Billion, compared to $145.1 Million in the previous year.