ICICI Bank, a successor to a development financial institution, retains its developmental role within a strong commercial framework. It is continuing with its legacy of being an angel investor or venture capital fund to commercialise the use of new technology.
It is doing this for new technology business ventures by helping them "from conceptualisation to commercialisation," says A T Kusre, general manager of the Technology Lines group of the bank. "The idea behind such investment is to encourage industrial firms to increase their R&D investments through closer relations between industry and technology institutions."
Thus, the bank also provides an important service in this regard - it helps industries establish contact with various research institutions like CSIR and ICMR.
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The assistance is disbursed under SPREAD or Sponsored Research and Development programme which aims to "improve the cost effectiveness of R&D projects and even reduce the cycle of such projects."
One of the programmes main innovations is to so structure its financial instruments as to make them far more flexible than conventional loans or grants.
Most of the funds are loans given at low interest rates which usually rise as the project grows and matures. Each could have a special feature which could be novel to that project alone .
This could include a conditional grant, a multiple interest rate structure, interest benefits or term loan with flexible repayment options.
Each project (the group has funded over 100 such projects) has a memorandum of understanding (MoU) which pre-determines the royalty ct fails, it gets written off. When a project succeeds, the bank can reap the benefits of successful commercialisation.
The amount of grant varies between Rs 1-10 crore. It is given from a combination of ICICI funds and World Bank aid for such projects.
Thirty projects have already started paying back and there is a very low rate of non-performing assets.
The investment focus is on sustainable development with environmental compliance as a prerequisite.
This will include clean technology, recycling factors and waste management, and energy conservation.
Projects financed for technology development and commercialisation cover R&D efforts, technology transfer and adaptation, demonstration projects and commercialisation of technology developed and concept issues.
The projects that have the potential to be funded, have to meet some of the following criteria