SBI, KDEM partner to offer collateral-free loans to startups

The State Bank of India (SBI) and the Karnataka Digital Economy Mission (KDEM) have partnered to support the state's budding startups with collateral-free loans.

In a bid to help the startups in need of seed-level financial assistance, the SBI and the KDEM on Friday signed a Memorandum of Understanding (MoU) to leverage the existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), set up by the Centre to improve the credit flow to the MSE sector.

Finance shouldn't be a problem for startups and multiple options for funding need to be tapped into, said Dr C N Aswath Narayan, Minister of the Department of Electronics, Information Technology, Biotechnology, Science and Technology. "We cannot look up to only FDIs. Local resources need to be utilised to their maximum potential," the minister said.

As per the MoU, the CGTMSE will be utilised by the SBI to provide collateral-free loans of up to Rs 2 crore to startups recognised under KDEM's Elevate programme.

SBI bets big on startups

Besides the loans, the SBI will also set up an exclusive branch for startups near Koramangala here by August. Similar branches will be set up in Delhi and Mumbai, said Rana Ashutosh Kumar Singh, SBI Deputy Managing Director, Transaction Banking and New Initiatives.

Secondly, the SBI will also set up a support desk for startups at the existing K-tech centre near HSR Layout in Bengaluru. Similar desks will be set up in the other three hubs being developed in Belagavi, Hubbali and Mangaluru as part of the KDEM's "Beyond Bengaluru" initiative.

Additionally, the SBI will also contribute to the Rs 75-crore equity cluster fund being accumulated to develop the three hubs. The Government of Karnataka will invest Rs 25 crore.