Indian Overseas Bank (IOB) is set to make its foray into the startup lending space, with plans to establish an exclusive startup branch, initially in Chennai, targeting startups based in Tamil Nadu. The public sector bank aims to have the specialized branch operational before the end of March 2024, with a focus on tailoring financial products to suit the specific needs of startups.
IOB’s Managing Director and CEO, Ajay Kumar Srivastava, shared insights into the bank’s strategy, stating, “The bank is entering into the startup financing space for the first time. We are devising products and services depending on their requirements.” The bank plans to build a startup portfolio of Rs 500 crore in the first year of operations in FY25 and gradually expand its startup branches to Bengaluru, Hyderabad, and Mumbai.
The bank is actively engaging with startups across various sectors, including drones, food processing, and information technology. Discussions are underway with a prominent higher education institute in the city to collaborate on identifying startups in need of financial assistance. Srivastava emphasized that the bank is formulating policies to support both existing and budding startups.
India has emerged as the third-largest startup ecosystem globally, with over 1,12,718 recognized startups, according to the national investment promotion and facilitation agency Invest India. The move by IOB aligns with the growing momentum in the startup landscape, especially in Tamil Nadu, where the number of registered startups tripled between 2021 and 2023, reaching 6,800 as of August 2023.
Srivastava expressed confidence in the timing of IOB’s entry into the startup space, noting, “We are entering at an appropriate time because some startups have faded away in the past two-three years. We had waited for the right time on how this entire portfolio will take shape. Moreover, our financials are good, and the bank has also got stability.”
IOB’s strategic move into startup financing reflects its commitment to supporting entrepreneurship and contributing to the growth of the startup ecosystem in India.
