Indian Private Equity & Venture Capital Association (IVCA) on Thursday said the industry body is happy to hear that the Reserve Bank of India (RBI) sees startups as growth engines.
In an interview to CNBC-TV18's Shereen Bhan, Karthik Reddy, vice chairman of IVCA, and managing partner of Blume Ventures, said, "It is a great direction move by the central bank. I am very happy to hear that they do see the entire ecosystem as engines of economic growth. It is clearly a direction of prioritising what can fuel that growth."
This comes after RBI included startups under the priority sector lending category. This means banks will now have to mandatorily lend a certain portion of their funds to startups.
Making the announcement during the monetary policy, RBI governor Shaktikanta Das said the priority sector lending guidelines have been reviewed with a view to align with emerging national priorities and bring sharper focus on inclusive development.
Indian startups have been depending on venture capital, private equity and angel investors to fulfill their capital requirements as banks have been wary of lending to startups due to lack of sufficient collateral. But this is likely to change with RBI including startups as priority sector.