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RBI brings startups under the purview of priority sector lending

Mumbai: The Reserve Bank of India (RBI) on Thursday brought startups under the purview of priority sector lending (PSL), a move that will make it easier for startups to raise funds from banks.

During the 24th Monetary Policy Committee meeting, the central bank announced revising the PSL guidelines including “broadening the scope of PSL to include startups” “with a view to align the guidelines with emerging national priorities and bring a sharper focus on inclusive development,” RBI said in its statement on developmental and regulatory policies to boost liquidity support for financial market. 

Other areas already included under PSL are agriculture, MSME, export credit, education, housing, social infrastructure, renewable energy, and others. The PSL guidelines were last reviewed by RBI in April 2015.

According to a survey on the Indian startup ecosystem by the RBI published in December last year, loans from institutions including banks was availed by 36 per cent of 1,246 startups surveyed while family & friends were the largest source of funding for around 43 per cent startups. 

Investments from angel investors accounted for 11.3 per cent , incubators accounted for 9.7 per cent and PE/VC accounted for 7 percent of the surveyed startups.

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