Reserve Bank of India (RBI) governor Raghuram Rajan said that the central bank will be creating a framework “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.”
The RBI said that it would be take steps for the conducive growth of startups in India in line with Prime Minister Narendra Modi’s Start-up initiative during the latest bi-monthly monetary policy statement.
Rajan added that a detailed statement will be issued separately on these measures.
Readers will also remember that in December, the RBI set up a dedicated helpline for startups to offer guidance and assistance for undertaking cross-border transactions within the ambit of the regulatory framework.
“While seeking guidance, the enterprises should provide complete information to the Reserve Bank and mention the specific issues on which they need guidance from the Reserve Bank in relation to the Foreign Exchange Management regulations. This would enable the personnel attending the helpline to offer timely and effective information,” the RBI said in a notification.
Startup India, Standup India event
Earlier this month, Modi announced a slew of measures and incentives for startups which included faster exits for startups through the bankruptcy bill, a startup fund of Rs 10,000 crore and tax exemptions.
Modi added that startups setup after April 2016 will be exempt from income tax for a period of three years. Exemption from capital gains tax for individuals will be extended to all startups from the existing MSME manufacturing startups.
The government would also be setting up 7 research parks and 35 incubators in 10 institutions. The government also said that startups will get a credit guarantee from SIDBI’s and the National Credit Guarantee Trust Company.
Other RBI developments
– Earlier last month, the RBI asked all banks part of the National Financial Switch (NFS) to make changes to their ATMs so that they can allow customers to register for mobile banking. The NFS is a India’s largest network of shared and interconnected ATMs developed by the Institute for Development and Research in Banking Technology and managed by the NPCI. More on that here.
– In August, the RBI increased the cash withdrawal limits for point-of-sale machines in rural areas. The apex bank enhanced the limit for cash withdrawal at POS for debit cards and open system prepaid cards issued by banks in India from Rs 1,000 to Rs 2,000 per day in Tier III to VI centres with immediate effect.