By: Chandrashekar Bhat
Silicon Valley Bank (SBV) which imploded on Friday (10) has exposure to more than 20 startups in India, according to a media report.
It has invested in startups including fintech major Paytm, mobile advertising technology company InMobi and online wedding service firm Shaadi, The Times of India reported citing research advisory Tracxn.
Paytm parent One97 Communications’ founder Vijay Shekhar Sharma said the bank, which was an early investor in his firm, “exited fully with handsome returns on their total investment of only $1.7Mn.”
It is not a current shareholder in his fintech firm, Sharma wrote on Twitter.
SVB Financial Group started its non-bank venture lending operation in India in 2008. Through SVB India Finance, the company provided debt capital to venture-backed, early and mid-stage, high-growth companies in India.
It opened offices in Bengaluru in 2004 and Mumbai in 2007 after years of relationship development in India.
Friday’s closure of SVB by American authorities has left markets jittery over a potential sign of widespread turmoil, but analysts see only a limited risk of financial contagion.
Its woes are the result of “idiosyncratic stresses and not one that we see as systemic that would affect the banking industry,” said CFRA Research’s Ken Leon, saying stricter US regulations enacted after the 2008 financial crisis have helped contain trouble.
A note from analysts at Morgan Stanley said, “We want to be very clear here … we do not believe there is a liquidity crunch facing the banking industry, and most banks in our coverage have ample access to liquidity.”
Treasury Secretary Janet Yellen described the US banking sector as “resilient,” while Cecilia Rouse, chair of the White House Council of Economic Advisers, also cited US reforms in arguing disaster would be averted.
Following the 2008 demise of Lehman Brothers and the ensuing financial meltdown, US regulators required major banks to hold additional capital in case of trouble.
US and European authorities also organise regular “stress tests” designed to uncover vulnerabilities at the largest banks.