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Indian Bank to provide credit to start-ups; ties up with IITMIC

Public sector lender Indian Bank has introduced an initiative for funding start-ups, ‘IND Spring Board’, in collaboration with the IIT-Madras Incubation Cell (IITMIC).

The Chennai-headquartered bank seeks to bridge the gap in funding for start-ups through this collaboration with IITMIC.

Under the deal, IITMIC will refer start-ups with proven technology and established cash flows to the bank and also extend advisory to the bank on the business model. The bank will extend loans of up to ₹50 crore to these start-ups for their working capital requirements or purchase of machinery, equipment.

“It is a known fact that banks find it difficult to fund start-ups, as they do not meet the requirements under traditional models of financing. The business models involving high technology, the lack of visibility of cash flows, credit history, the high burn rate, the high failure rate among start-ups make the process of due diligence for assessing viability by banks difficult. Resultantly, this segment has been almost completely funded by seed capital, or private equity from India/ abroad,” said Padmaja Chunduru, MD and CEO of Indian Bank.

“This initiative, we believe, will be the spring board for start-ups to realise their ambitions. We see this collaboration as a perfect fit both for the bank and IITMIC,” she added.

The initiative was digitally launched by K Ananth Krishnan, EVP and CTO, Tata Consultancy Services, in the virtual presence of Debasish Panda, Secretary, Financial Services, Union Ministry of Finance.

“IND Spring, the new model for financing start-ups, will be a game-changer in the banking industry, said Panda.

“For start-ups, working capital is a bottleneck, since they don’t have collateral and the entrepreneurs are also not in a position to provide a personal guarantee. By launching IND Spring Board, Indian Bank has proved that it certainly cares for these entrepreneurs,” said Ashok Jhunjhunwala, Co-Chairman, IIT Madras-Incubation Cell.