The Union Cabinet has approved proposals to tweak Fund of Funds of Start-ups (FFS) rules to enable greater flow of resources. FFS was established in June 2016 with a corpus of Rs. 1,000 crores.
The proposals approved are
Alternate Investment Funds (AIFs) supported by FFS shall invest at least twice the amount of contribution received from FFS in Start-ups.
Further, if the amount committed for a Start-up in whole has not been released before a Start-up ceases to be so, the balance funding can continue thereafter.
The operating expenses for carrying out due diligence, legal and technical appraisal, convening meeting of Venture Capital Investment Committee, etc. will be met out of the FFS.
These expenses will be to an extent of 0.50% of the commitments made to AIFs and outstanding.
This will be debited to the fund at the beginning of each half year i.e. April 1 and October 1.
Background
The Union Cabinet in June 2016 had approved the proposal to establish a Fund of Funds for Start-ups (FFS) with a total corpus of Rs.10000 crore.
It was approved with contribution spread over the 14th & 15th Finance Commission (FC) cycles based on progress of implementation and availability of funds.
It was decided that the FFS shall contribute to the corpus of AIFs for investing in equity and equity linked instruments of various start-ups at early stage, seed stage and growth stages.
The FFS is being managed and operated by Small Industries Development Bank of India (SIDBI).
It contributes to SEBI registered AIFs that may go up to maximum of 35% of the corpus of the AIF concerned.
Current Affairs 23rd March, 2017 Current Affairs Round Up Bullet Points, February, 2016
Join The Discussion