Latest News | CII Bats for Domestic Financial Ecosystem to Support Startups

New Delhi, Mar 13 (PTI) With several domestic startups facing the heat due to the collapse of Silicon Valley Bank, CII President Sanjiv Bajaj on Monday said that India could look to create its own enabling financial ecosystem to support budding entrepreneurs.

Talking about the startup sector, the CII President in an interview with PTI said it is an unusual sector where the normal banking parameters do not work.

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"It (startup sector) is a very high growth, it is very innovative, it is loss-making in the initial years. So, the normal banking parameters for lending don't really work. How do you create the right financial ecosystem in India to support startups because we are a startup nation," said Bajaj, who is also the Chairman and MD of Bajaj Finserv.

Observing that India is the third largest startup ecosystem in the world, he said there is a need to encourage startups.

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"We have the entrepreneurial zeal, we have the technical capability and the enabling ecosystem for it, but finance is something that is probably taken more as a given. It requires more thoughtful intervention now."

According to reports, at least 40 YC-backed Indian startups have USD 2,50,000 to USD 1 million in deposits with SVB while more than 20 of them have deposits of more than USD 1 million.

California-based Silicon Valley Bank (SVB), the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation, which later appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver.

Asked whether industry body representatives should have been included in the Supreme Court-appointed committee set up to suggest measures to protect investors' interest, the CII President said: "Well, I leave it to the judgement of the court to decide what is an appropriate composition.

"I believe that when a country is growing at our rate as much as one tries to put in place regulations, sometimes as economies overheat, you can have companies that overheat and that require quick remedial action, which I believe, in this case, has already started."

Talking about the growth prospects, Bajaj said, the economy is estimated to grow at around 7 per cent in the current fiscal ending March and 6.5 per cent next year in the absence of any significant negative trigger.

He wants the RBI to pause the interest rate hikes and adopt a neutral stance, which is necessary for promoting economic growth.

The next monetary policy of the RBI is scheduled on April 6.

To contain the rising prices, the RBI has hiked interest rates by 250 basis points since May last year. The latest rate hike of 25 basis points in February took the benchmark policy rate to 6.50 per cent.

The CII President also made a case for an employment-linked incentive scheme on the lines of PLI for generating jobs in sectors like tourism and logistics.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)