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India Eyes New Laws For SME Alt Finance

Indian lawmakers are reportedly in the process of facilitating small businesses’ access to lending and financing in the nation through the development of a new alternative lending platform.

According to reports, the Securities and Exchange Board of India (SEBI) is drafting up a set of guidelines that allow startups to access funds without an IPO. Startups in the nation cannot easily debut as a public company thanks to strict requirements for listing, reports said.

The new initiative is called the Alternate Capital Raising Platform and aims to encourage SMEs in India to remain in the nation instead of turning to the Hong Kong or Singapore markets to raise funds. Reports said that the platform would act similarly to an IPO but provide investors and venture capitalists with greater access to information about these startups that are seeking funding.

According to SEBI, India needs to foster the development of innovative startups and find a way to support them despite investors’ reluctance to finance these new businesses due to a lack of understanding about new products and services put forth by these startups.

The SEBI is proposing that pre-issue capital will be locked in for six months, compared to three years required by a traditional IPO. Startups will also face a more lenient process for disclosing their business model, and raising capital will be allowed through the Institutional Trading Platform, a new platform that will include both Qualified Institutional Buyers and Non-Institutional Investors. Retail investors would not be allowed to invest in startups through the Platform.

According to reports, the new regulations will go into effect by early June. The SEBI had previously published a working paper to discuss the development of such a platform as well as regulatory requirements for the process and had obtained public comment on the proposals until late last month.

India has become a leading market for startups that are innovating the ways companies do business. Experts have particularly highlighted the nation’s strong community of B2B eCommerce startups.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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