Reserve Bank lets start-ups raise $3 mn a year via ECBs
With a view to boosting innovation and promoting job creation, the Reserve Bank on Tuesday said start-ups can raise external commercial borrowings (ECBs) of up to 3 million in a financial year.
They will be permitted raise the overseas funds in rupees as well as in foreign currency.India has the third-largest number of start-ups globally.
In January, Prime Minister Narendra Modi had unveiled a slew of incentives for them including tax holiday, inspector raj-free regime, capital gains tax exemption and Rs 10,000 crore corpus to provide funds. Government has also relaxed procurement norms for them.
Statement on developmental and regulatory policies announced by RBI said start-ups have the potential to play a significant role in economic growth and job creation by spurring innovation and injecting competition.
“Taking into account the available funding channels from overseas for start-ups, the RBI, in consultation with the Government of India, will allow such entities to raise ECB up to USD 3 million or equivalent per financial year either in INR or in any convertible foreign currency or a combination of both,” it said.
It will issue guidelines in this regard by month-end.
A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.
The statement further said that RBI will review guidelines for Pre-paid Payment Instruments (PPI).