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RBI to allot Rs 2,000 crore for startup fund next year

Tags: RBI, Startup fund, VC fund, Venture Capital, SME, MSME, SME financing

February 11, 2015 | COMMENTS ( 0 )

RBI to allot Rs 2,000 crore for startup fund next year

The Reserve Bank of India will allocate Rs 2,000 crore for the government’s proposed startup fund in the next financial year, reports the Economic Times. During the budget presentation in July last year, finance minister Arun Jaitley had proposed a Rs 10,000 crore startup fund to attract private capital by providing equity, quasi equity, soft loans and other risk capital for startups.

The report also mentions that a seven-year fund-of-funds will be carved out of the Rs 10,000 crore allocation and managed by a nodal bank, which is reported to be either ICICI Bank or Small Industries Development Bank of India (SIDBI). The money will be deployed to investment firms that apply for it.

The fund is also reported to have a clause looking to restrict the flight of startups overseas, and venture funds drawing from it to invest the money only in India-registered startups. A government official told ET that the fund will work in a co-investing model whereby VC funds will have to put in 70-90 per cent of the investment and take 20-30 per cent from the nodal bank, but he added that the percentage of government’s contribution is still to be decided.

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