V Vaidyanathan says Tier‑II and Tier‑III cities now power India’s startup boom at ET Startup Awards

What happened

V Vaidyanathan, chief executive and managing director of IDFC First Bank, addressed the ET Startup Awards 2026 in Mumbai on 17 October. He told the audience that India’s startup engine is no longer confined to the traditional tech corridors of Bengaluru, Hyderabad or Delhi. "The range of applications we are seeing today, including satellite technology, hyperspectral imaging, AI‑enabled brain mapping and advances in computing, demonstrate the ambition and technical talent driving India’s startup ecosystem," he said.

Who was involved

The speech was delivered by V Vaidyanathan on behalf of IDFC First Bank, a private‑sector lender created by the merger of Capital First and IDFC Bank in December 2018. The event, organised by the Economic Times, brings together founders, investors and policymakers to celebrate the country’s most innovative ventures.

Key numbers and trends

• 52 % of the startups that bank with IDFC First Bank are based in tier‑II and tier‑III cities, a clear sign that entrepreneurship is diffusing beyond the usual hubs.
• The bank’s own data shows a steady rise in accounts from these regions over the past three years, mirroring the government’s push for balanced regional development.

Why it matters

IDFC First Bank’s figures echo a broader shift that the Finance Ministry and state governments have been encouraging through schemes such as the Startup India Programme and the Atmanirbhar Bharat initiatives. By widening the geography of innovation, the country reduces over‑reliance on a few metros, creates jobs in smaller towns and bolsters national economic resilience.

Advice for founders

Vaidyanathan warned that access to finance is only half the battle. "Startups often raise capital from investors but may leave funds in accounts that do not earn interest; entrepreneurs should understand their options and make their cash work more effectively," he urged. He stressed that sound cash‑flow management can be as critical as product development or fundraising.

The bank’s role

Beyond standard banking services, IDFC First Bank offers bespoke advisory on fund management, credit lines tailored for early‑stage companies, and a network of mentors to help founders move from idea to market. Vaidyanathan positioned these services as essential scaffolding for the next wave of Indian innovators.

What’s next

With tier‑II and tier‑III cities now accounting for more than half of the bank’s startup clientele, IDFC First Bank plans to expand its branch footprint and digital onboarding platforms in regions such as Indore, Kochi, Mysore and Ranchi. The bank also intends to launch a dedicated “Startup Growth Fund” later this year, aimed at providing low‑cost capital to high‑potential firms outside the major metros.

Bottom line

The ET Startup Awards 2026 spotlighted a decentralised future for Indian entrepreneurship. V Vaidyanathan’s message was clear: the country’s growth story is being rewritten in smaller cities, and founders who pair bold ideas with disciplined financial stewardship will drive the next chapter of that story.