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State Bank Of India has launched $30 Mn (INR 200 Crore) ‘IT Innovation Startup Fund’ to support startups in the fin-tech space. The announcement was made by SBI Chairman Arundhati Bhattacharya at a CII event in Mumbai.
This will provide assistance of up to INR 3 crore to a firm registered in India for promoting their business innovations using technology in financial services.
Apart from funding, startups will get mentoring team which will support, monitor and make a report on the progress and the utilisation of the funds by the venture. Also, external financial and legal assistance will be provided as and when required.
“With emergence of technology, banks are facing twin challenges of managing their technology legacy stack and bringing the cost down for small transactions. Banks today need to cross sell in collaboration with fintech companies as they are here to stay,” said Arundhati.
She further emphasized need for a suitable regulatory framework to address the associated risks, like technology risks, cyber- security risk, data-theft risk, cross-linkages and source of funds.
Earlier in January this year, SBI launched a startup branch called InCube in Bangalore as a single point of contact for the startup account holders. The branch would help them in creating business plans, serve various financial advisory, compliance and registration related requirements. It has signed up 200 clients so far.
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 Bn, compared to $145.1 Mn in the previous year. With fintech software market expected to reach $2 Bn by 2020, many multinational banks are also looking to invest in early-stage fin-tech start-ups in India. At present the total Indian fin-tech market is about $8 Bn.
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