SBI launches Rs 200-crore fund for fintech start-ups

The bank to consider assistance of up to Rs 3 cr to an Indian registered company for promoting their business innovations

To support start-ups in the financial technology (fintech) space, State Bank of India has set up a Rs 200-crore fund.

It will consider assistance of up to Rs 3 crore to a company registered in India for promoting their business innovations using information technology for banking and related activities, Arundhati Bhattacharya, chairman, said. It is named ‘IT Innovation Start-up Fund’.

Investment in fintech companies in India touched $1.2 billion (Rs Rs 8,000 crore) in 2015, compared to $145.1 million (nearly Rs 1,000 crore) the previous year. Many multinational banks are also looking to invest in early-stage fintech start-ups in India and these trends are moving at a considerable pace, according to a CII-PwC report. With digital technology making greater inroads into banking, many financial institutions are trying to spot start-ups in the fintech space.

The SBI chief also said the bank had formed a mentoring team to assist start-ups. It will support, monitor and make a report on the progress and utilisation of the funds. The team will facilitate and guide businesses, extending help in various areas, including additional funding, she added. Also, legal and financial assistance.

She said the bank had opened a start-up branch called InCube in Bengaluru this January. It functions as a single point of contact for start-up account holders for their various banking and financial advisory requirements.

This branch doesn’t give out money but helps start-ups to create a business plan, finds their legal requirements and helps with compliance and registration. It has about 200 clients. Bhattacharya said the bank was looking at cross-selling through collaboration with fintech companies, as banking could also benefit from fintech. “There might 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.

She emphasised the need for a suitable regulatory framework to address the associated risks, on technology, cyber security, data theft and so on.