New Delhi, Oct 13 (KNN) Banks are urging the Reserve Bank of India (RBI) to set up a dedicated liquidity window to offer financing to startups in the country, reported Business Standard. 

The Indian Banks’ Association and the Federation of Indian Chambers of Commerce & Industry has argued that accessing funds at concessional rates from the RBI would serve as a safety net for their net interest income in dealing with this high-risk segment.

Startups primarily receive equity in the form of risk capital from sources like angel and venture funds. 

However, they also require debt to scale up their businesses over time, and banks can play a crucial role in providing this, with appropriate safeguards, said the bank association. 

One of the major concerns is the high risk of mortality associated with startups, which can result in loans going bad, a worrisome scenario for lenders when making provisions.

Concessional funding can serve as a buffer to absorb such risks, said public sector bank executives.

Many banks have established separate wings and branches to support the growth of new enterprises, especially in financial technology, information technology, and emerging sectors. 

These efforts aim to cater to the specific financial needs of startups, including offering tailored loan products, mentorship services, and financial guidance.  (KNN Bureau)