State Bank of India (SBI), the country's largest bank, has planned to invest a Rs 200-crore fund to empower startups 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 announcement comes against the backdrop of a greater thrust from the Centre on developing the startup ecosystem. With digital technology making greater in-roads into banking, majority of financial institutions have upped their engagement to spot startups in the fintech space.
Arundhati said the bank has also formed a mentoring team to assist startups. It will support, monitor and make a report on the progress and the utilisation of the funds by the venture.
The team will facilitate and guide business, extending help in various areas including additional funding requirement, she said, adding that it will also give external legal and financial assistance as and when required. The team may have one or more external technical experts. Arundhati also said that the bank has opened a startup branch called InCube in Bengaluru in January. It functions as a single point of contact for the startup account holders for their various banking and financial advisory related requirements.
This branch is not giving actual funding. It handholds startups to create their business plans, finds out their legal requirements, help them with compliance and registration, she said, adding that it has signed up 200 clients so far.
The bank is looking at cross-selling through collaboration with the fintech companies as it provides a great opportunity.
It is not only the fintechs that are coming into banking, but banking can also benefit from fintech. There may 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.
Arundhati 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.