SBI signs pact with Karnataka to open India’s first branch for startups

Karnataka Digital Economy Mission (KDEM) and State Bank of India Friday signed a Memorandum of Understanding (MoU), which enables SBI to open its country’s first dedicated branch for startups (SBI Startup Hub branch) in Koramangala. The branch will be inaugurated in August.

The collaboration will enable startups across the state to access banking facilities, funding, credit facilities. Rs 2 crore collateral-free financial assistance will be given to startup entrepreneurs.

Dr C N Ashwath Narayan, Minister for IT/BT said the MoU will boost the prevailing startup ecosystem in the state. He announced that SBI will start similar branches in Mysuru, Mangaluru, and Hubballi-Dharwad clusters in the next six months.

“As per this MoU, SBI will work towards creating and enabling a mechanism for startups recognised by the Government of Karnataka and supported by KDEM for availing time-bound credit based on the purchase order. KDEM will establish a Fintech Innovation Hub at Mangaluru focusing on the Fintech area and SBI has agreed to be one of the partner organisations for the planned innovation hub sharing knowledge and providing financial support,” he said.

Narayan expressed confidence that the collaboration between KDEM and SBI would benefit startups by enabling access to banking facilities including focused services like access to funds, credit facilities among others to boost the startups across the state.

“The state government has envisaged helping startups by making use of the Union Government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to provide loans of up to Rs 2 crore for micro and small enterprises. Karnataka has more than 13,000 startups and some of them are facing a paucity of funds. The MoU between KDEM and SBI will help to address this by facilitating access to credits,” the minister said.

CGTMSE was launched by the Union government to make collateral-free credit to the micro and small enterprises sector.

Speaking on the occasion, Rana Ashutosh Singh, SBI, Deputy Managing Director (Transaction Banking & New Initiatives), said that the initiatives of the state government have prompted SBI to go ahead with the launch of a dedicated branch to provide cluster seed fund, the first time in the country.

“Our plan is to design a product exclusively for startups. The dedicated branch is only for startups. All the facilities to aid startups will be here. The branches in Mysuru, Mangaluru and Hubballi-Dharwad clusters which will come up will be connected to the Koramangala branch,” Singh said.

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