Rajan disappoints car and home buyers
Rajan disappoints car and home buyers
In order to address the issue of scarcity of funds faced by startups in India, the Reserve Bank of India (RBI) is planning to relax regulations governing cross border transactions that will make it easier for start-up enterprises to access funds from the overseas market.
In its bi-monthly monetary policy statement for 2015-16 on Tuesday, the RBI said that it would relax the necessary provisions under the Forei-gn Exchange Manage-ment Act (FEMA) that will enable start-up enterprises irrespective of sectors to access foreign venture capital investment without restriction and also allow such enterprises to access rupee loans under the external commercial borrowing (ECB) framework with relaxations in respect of eligible lenders.
The proposed relaxation would also enable venture capital investors to transfer their shares to other residents or non-residents, issuances of innovative FDI instruments like convertible notes by startup enterprises and streamlining of overseas investment operations for the start-up enterprises.
“These measures will create an enabling framework for receiving foreign venture capital, differing contractual structures embedded in investment instruments, deferring receipt of considerations for transfer of ownership, facilities for escrow arrangements and simplification of documentation and reporting procedures,” RBI said in its policy statement.
“Startups have only been used to equity as a mode of capital and we believe that the RBI initiative will bring in the concept of venture debt which is miserably missing in the ecosystem. GREX has already set-up an ecosystem to help start-ups raise funds and is also poised to launch venture debt. This will help our partner Banks and NBFCs walk the road along with us more aggressively as credits is easily available.” Manish Kumar, founder and CEO, GREX.
