By: Shubham Ghosh
Indian startups had deposits worth about $1 billion (£823.4 million) with the US’s embattled Silicon Valley Bank (SVB), the country’s junior information technology (IT) minister said on Thursday (16) and suggested that local banks lend them more in times to come, Reuters reported.
Banking regulators in California closed SVB on March 10 following a run on the bank, which had $209 billion (£172.1 billion) in assets at the end of last year.
The depositors withdrew as much as $42 billion (£34.5 billion) in a day, rendering the lender insolvent and the US government eventually intervened to ensure that the depositors had access to their funds.
Speaking in a Twitter chat on Thursday night, Rajeev Chandrasekhar, India’s minister of state for IT, said, “The issue is, how do we make startups transition to the Indian banking system, rather than depend on the complex cross border U.S. banking system with all of its uncertainties in the coming month?” Reuters reported.
According to his estimate, hundreds of Indian startups had more than a billion dollars of their funds in the US bank that crumbled.
The minister met over 460 stakeholders in the current week, including startups that were impacted by the closing of SVB, and said he had forwarded their suggestions to the Indian finance minister, Nirmala Sitharaman, the Reuters report added.
Citing one of the suggestions that he received, the minister said that banks in India could offer a deposit-backed credit line to startups that had funds in the US bank, using those as collateral, Reuters added.
India is home to one of the world’s biggest startup markets, with many achieving multi-billion-dollar valuations in recent years and the backing of foreign investors.