10thJuly, 2023:  Ankit Poddar, founder of building management tech startup ZedBee, needed money to expand business and as working capital. Venture capital investment was tough given the market, and large banks were often out of touch with the realities of the startup world.

That’s when India’s largest public sector bank, State Bank of India, set up its special ‘startups branch’ at the IIT Madras Research Park. Based at the park himself, Poddar just had to walk over to the building’s next wing to get his loan processed.

“The team at SBI was in tune with all the nuances of lending to a startup, and it was a smooth process,” he says. “With a fairly young team, the branch offers the combination of both experience and agility,” he adds.

The SBI’s specialised startups branch was set up in January in Chennai, the second in the country after Bengaluru. The branch exclusively serves startups recognized under the Startup India initiative, providing all-encompassing solutions from SBI as well as its subsidiaries and joint ventures under a single roof.

Loans, regular banking products, and other value-added services are all customised for startups. The special loan policy calls for not just insisting on financial performance or projections of startups, but also dwelling deeper into their product and future potential. Entrepreneurs present their loan proposal to a special committee of experts.

The idea behind starting a startup branch is to nurture the country’s startups and goes beyond widening the bank’s business prospects, says M V R Muralikrishna, general manager, SBI Chennai Circle. “We understand what it means for these passionate entrepreneurs to get financial support in the early stages and are trying to structure the products to suit these needs,” he says.

The lender has since opened similar specialised branches across the country with the learnings from the two technology cities. So far, the startup branch at the IIT-M research park has opened 175 current accounts, mobilised deposits of around `170 crore and sanctioned `52 crore in loans to startups.

At 10-12 personnel, the team is larger than an average branch with such metrics. Besides relaxations on head count criteria for salary accounts, the branch also eases the process of getting working capital loans without collaterals.

While exercising prudence, SBI takes into account the unique needs of entrepreneurs while offering customised ‘MSME Udaan’ loans. It provides them funds for building prototypes, R&D, marketing expenditure, and even growing the team. Startups usually have a lean team juggling all tasks, so the branch also handholds them through the banking relationship.

The startup friendliness extends to the look of the branch itself – it is designed like a startup office with colourful and quirky interiors making it is less daunting to the millennial or GenZ entrepreneur who has never visited a bank.Ashok Jhunjhunwala, president of the IIT Madras Research Park, says working capital loans are lifelines for deep tech startups that often have a long gestation period. “In a difficult funding environment like today, when venture investment is not easy, we felt it important to have easy access to banking solutions for our entrepreneurs,” he says.

The research park houses the IIT-M incubation cell, which has a network of 300-plus startups with an aggregate valuation of around ₹45,000 crore. It is also home to other technology SMEs and R&D hubs. The branch conducts weekly ‘startup connect’ meets inviting new startups and arranging interactions with senior functionaries of the bank and other experts from the startup ecosystem.

This helps startups to get more at ease with the bankers, clarify their doubts. This also helps them network with other startups that could result in business synergies. In a month or two, SBI also plans to conduct meet-ups to connect startups with venture capitalists to facilitate investment discussions.

 Publication: Times of India

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