Summary of RBI policy changes to support Start Ups
In line with the recently announced Startup India Action Plan (‘the Action Plan’), the Reserve Bank of India (‘RBI’) in its ‘Sixth Bi-monthly Monetary Policy Statement, 2015-16 (‘the Policy’)’, has indicated that steps would be taken for ensuring ease of doing business and creating an ecosystem that is conducive for the growth of Startup enterprises.
The regulatory relaxations announced by the RBI are summarised below:
A. Changes proposed to be made in consultation with the Government of India (‘GOI’)
a. Enabling Startup enterprises to receive foreign venture capital investment, regardless of the sector in which they operate
b. Explicitly enabling transfer of shares from foreign venture capital investors to other residents / non-residents
c. With regard to the transfer of ownership of Startup enterprises:
• Permitting receipt of consideration on a deferred basis – currently, such a deferral is not permitted
• Enabling escrow arrangement or indemnity arrangement facility for Startup enterprises up to a period of 18 months, as against the 6 months period permitted currently
d. Enabling online submission of Form A2 for outward remittances, with minimal documentation e. Introducing simplified process for delay in reporting of foreign direct investment (‘FDI’) and related transactions, by building a penalty structure in the Regulations.Currently, no specific penalty is provided in the Regulations
B. Proposals under consideration, in consultation with the GOI
a. Permitting Startup enterprises to avail rupee loans under the External Commercial Borrowings regulations, including relaxations with regard to ‘eligible lenders’, etc
b. Permitting issuance of innovative FDI instruments (example convertible notes, etc) by Startup enterprises
c. Streamlining of overseas investment operations for Startup enterprises
C. Clarifications with regard to certain issues currently permissible
a. Issue of shares through sweat equity or against any legitimate dues of the Startup enterprise; provided such remittance does not require approval under FEMA
b. Collection of payments by Startup enterprises on behalf of their overseas subsidiaries more
The regulatory relaxations announced by the RBI are summarised below:
A. Changes proposed to be made in consultation with the Government of India (‘GOI’)
a. Enabling Startup enterprises to receive foreign venture capital investment, regardless of the sector in which they operate
b. Explicitly enabling transfer of shares from foreign venture capital investors to other residents / non-residents
c. With regard to the transfer of ownership of Startup enterprises:
• Permitting receipt of consideration on a deferred basis – currently, such a deferral is not permitted
• Enabling escrow arrangement or indemnity arrangement facility for Startup enterprises up to a period of 18 months, as against the 6 months period permitted currently
d. Enabling online submission of Form A2 for outward remittances, with minimal documentation e. Introducing simplified process for delay in reporting of foreign direct investment (‘FDI’) and related transactions, by building a penalty structure in the Regulations.Currently, no specific penalty is provided in the Regulations
B. Proposals under consideration, in consultation with the GOI
a. Permitting Startup enterprises to avail rupee loans under the External Commercial Borrowings regulations, including relaxations with regard to ‘eligible lenders’, etc
b. Permitting issuance of innovative FDI instruments (example convertible notes, etc) by Startup enterprises
c. Streamlining of overseas investment operations for Startup enterprises
C. Clarifications with regard to certain issues currently permissible
a. Issue of shares through sweat equity or against any legitimate dues of the Startup enterprise; provided such remittance does not require approval under FEMA
b. Collection of payments by Startup enterprises on behalf of their overseas subsidiaries more
Viewed by 1961
View all 12 comments Below 12 comments
one of my friends wants to avail benefits of start up policy and can invest about 5-6 cr. pl guide which type of product to be selected/covered in starts up. pl convey procedure for stsrt ups project. more
Feb 28
Is there any procedure or support from startup ecosystem to ease out the gaps..in registering the company..or we need to go through the tedious process of registration like registering through ..comany act as PVT.Ltd..then we need to become eligible for startup ecosystem..is there any support for easing out these practical gaps.. more
Feb 26
Each state is having an Entrepreneurship Cell. Govt Start up fund can be provided through them to the new breed of entrepreneurs This will make the Centres also more enthusiastic in creating new entrepreneurs and hence new employment opportunities. more
Feb 11
An independent body of auditors be monitoring and guiding free of charges to put the new babies on trackk at least in the beginning say for six months. Mothers care. more
Feb 09
any stat up industry should be on constant monitoring by govt to assess performance to the level accepted for profit. more
Feb 07
