In the wake of the collapse of the California-based Silicon Valley Bank, a panel of the Indian Banks’ Association is set to hold a meeting next week to likely discuss a mechanism to support the startup ecosystem in the country, according to a report by the Business Standard.
Bankers believe they will need to hone their skills when it comes to development of talent, creating a funding pool, and working on risk management. They said that the scheduled meeting will likely focus on issues like capacity building and regulatory rules.
On Monday, Axis Bank had said that it would now take steps to help startups that have been affected by SVB’s collapse. “We are actively engaging with these startups to help them park their funds in the GIFT City branch of Axis Bank. It also opens doors for further business engagements with these entities in the future,” Ganesh Sankaran, a senior executive of the bank, told the publication.
He further added that some companies that operate in the B2B and large online car marketplaces as well as the agriculture/food tech space have shown interest in shifting their funds to Axis Bank's GIFT City branch.
Sankaran revealed that a number of financial sponsors are also in talks with the bank to explore their "GIFT City proposition".
Not only private banks, but also those belonging to the public sector have shown reluctance to enter the startup space considering the high risk involved. Most startups receive their fundings from venture capital entities.
Banks might have to create a separate vertical altogether in order to enter this business and build a talent pool of bankers with expertise in the startup sector.
Fund allocation as well as risk management may come at a higher pricing owing to the risk involved.