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Banks need to facilitate Start ups Registered in India

 


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Banks need to facilitate Start ups Registered in India
My feedback cum views after a discussion. As a founder said to me, “As a startup, it’s imperative for us to move extremely fast and that’s what enables us to compete against established companies. Our clients also expect us to deliver with minimal lead time. However, we have been facing many speed bumps especially with import and export where banking regulations are concerned - these are crucial aspects of our business’.
Compliances and detailed documentation for even identification and the work undertaken and funding requirements asked frequently by the Bsnks from the start up are barriers at times. Single founders or focused founders do not have the team strength to keep attending to documentation and processes. This applies to Start ups registered and incorporated in India. Which actually is a priority of the Government. Start ups registered abroad are not subjected to these protocols and processes as per the founders I met.
To give an example, a start up founder says, paying a Chinese vendor for electronic components is as easy as entering card details for a US company. However for start ups registered in India, a couple of start up founders say it involves a lot of back and forth is involved including filling several set of documents and arranging for proforma invoices to the exact requirements of the bank, submitting them in signed and sealed hard copy (completely out of place in the digital era), after which the bank takes several days to process it at their end and finally payment is made to the vendor. Since vendors arrange to procure goods at their end only after payment is received, this adds a significant delay to their process and makes them less attractive than their international competitors. Speedy processes while still adhering to regulations and protocols is the key. Maybe staff at banks are still understanding the operating environment and imperatives of start ups.
Even though start up founders I met understand the importance of regulations like FEMA or even the FCRA, their considered suggestion is that at least a digital process to make outward remittance and preferably same day approvals and payments by banks will significantly ease their job as they are multitasking and gives them a fair playing ground against competitors whether from India or abroad Even a dedicated start up branch, set up by India’s largest bank, in a major start up oriented metro, is unable to understand this imperative. I thought this does deserve discussion and attention and due consideration.
Dinesh K Kapila

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