Union minister of state (MoS) for IT Rajeev Chandrasekhar on Thursday said the deposits of Indian startups in the recently collapsed Silicon Valley Bank (SVB) are estimated to be over $1 billion. Out of the total deposits of startups, over $200 million have been transferred to banks in the GIFT City in Gujarat, the minister said.
“I had kind of very empirically and anecdotally calculated that there was more than a billion dollars of startup capital as deposits. According to some, this is a conservative estimate, Chandrasekhar said during a Twitter live session late on Thursday. “…there are several hundred startups that were directly impacted and number of funds who are investors in those startups were also consequently impacted,” Chandrasekhar added.
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“I suspect that by the end of this week, a significant part of crisis would have in a sense blown over. Now, the issue is how do we make startups transition to use the Indian banking system more rather than depend on some complex cross-border US banking system,” he said.
On Tuesday, the minister met over 450 entrepreneurs and venture capitalists (VCs) on the SVB crisis, and discussed issues like enabling funds transfer from the US to Indian banks, need for deposit-backed credit lines, development of innovative credit products, and need for support to startups from Indian banks in the US.
Startups like Zoth.Io, Hatica.Io and VCs and financial service providers like Blume VC and Mirae Asset were part of the meeting.
Among other things, some of the concerns that were shared by the attendees included transfer of their US Dollar deposits to India and to US-based branches of Indian banks.
“I have made a case to Finance Minister Nirmala Sitharaman that the Indian banking system can be a lot more startup-friendly. There’s a need for Indian banking system to consider startups as important target segment,” Chandrasekhar said.
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On March 10, the California Department of Financial Protection and Innovation had shutdown the Silicon Valley Bank after depositors started withdrawing their funds all at once. The collapse of the bank can be attributed to several increases in interest rates by the US Federal Reserve to tame the inflation, and that in a way made lending of funds costly.
The bank had $209 billion in total assets and about $175.4 billion in total deposits.