It seems like the Reserve Bank of India, the ruling and regulatory body of finances in the country, has caught the startup fever too. The bank has today talked about making several significant changes including easing rules for deals involving start-ups.
The move is bound to be greeted with delight by the masses, who are still recovering — in a good way — from the aftereffects of PM Modi’s Startup India, Standup India initiative, among others.
Not only will the Reserve bank allow the receipt of the deal value on a deferred basis in case of a transfer of ownership of a start-up enterprise, but is also ruminating over allowing startups to issue stuff like convertible notes to foreigners.
The latter, would in effect let growing companies access virtually inexhaustible sources of funds from sources situated abroad, more easily. This would in effect, also lead to relaxations where both lenders and borrowers would have a better time while transacting.
Sharing his views with us on the topic, Mr. Himanshu Meena, Founder and CEO of Parsel, said,
The RBI’s initiative to improve the ‘ease of doing business’ for start-ups in the country is extremely refreshing. It will help the entire startup eco-system in setting up a new enterprise at a much faster rate than usual.
Dr. Raghuram Rajan’s decision of 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 will help start-ups like Parsel to gain easy access to capital.
With the PM Modi’s start-up India event to boost start-up businesses and with RBI support the startup sector is poised to get a great push. India will soon see more and more entrepreneurs with the improving startup environment.”
Well, we certainly hope so too.
For those who are unacquainted with it, Parsel (Dropbase Software Private Limited) is a hyper-local delivery start-up, that provides ready to use delivery infrastructure & technology platform. So if they find the new measures conducive to business, other startups will hopefully, be happy with them as well.
The new measures have arrived at a pretty good moment, and may just serve to induce investors to continue pumping money into businesses. The scenario had turned a bit dismal after a lack of profits from startups, had led investors to pull their hands a bit.
Let’s hope that the new initiatives by RBI, help turn things around again.