BUSINESS
After US authorities took over, SVB Financial sought bankruptcy protection in order to stay afloat.
In light of today's bankruptcy filing by SVB Financial, the parent company of Silicon Valley Bank, RBI Governor Shaktikanta Das issued a warning to Indian banks about their asset-liability mismatch. As US authorities seized over, SVB Financial filed for bankruptcy because it was unable to continue operations without outside assistance.
By the end of 2022, SVB's assets were USD 209 billion, while its deposits were at USD 175.4 billion, this made it the sixteenth biggest bank in the United States. When the FDIC took over Silicon Valley Bank, SVB Financial Group has severed ties with the defunct bank.
The SVB problem is reminiscent to the 2008 financial crisis in many respects.
Union Minister Rajeev Chandrashekhar said that some Indian firms have more than a billion dollars in SVB. Assuring the entrepreneurs impacted by SVB's closure, Chandrashekhar said he sent their proposals to Finance Minister Nirmala Sitharaman.
According to Chandrashekhar, Indian banks might provide a deposit-backed credit line to startups with capital in SVB if they followed the advice given to the Finance Minister.
According to data compiled by Tracxn, SVB has put money into around 21 different companies throughout India. Other companies that have received money from SVB include Bluestone, Carwale, InMobi, and Loyalty Rewardz. According to Tracxn, SVB has not made any significant investments in Indian companies since 2011. Tracxn is compatible with services such as Paytm, Paytm Mall, and One97 Communications.
According to Paytm's founder Vijay Shekhar Sharma, Silicon Valley Bank (SVB) has generated a tidy return off of its initial USD1.7 million investment in the company. Following years of involvement, Sharma has confirmed that SVB is no longer a part of Paytm.
Also, READ: Home Loan: Looking to take home loan amid rising interest rates? Know 8 essential things to avoid problems
According to a YC WhatsApp poll quoted by The Economic Times, at least 40 YC-backed Indian companies have accounts with SVB between USD 250,000 and USD1 million, and more than 20 of them have balances exceeding USD 1 million each.
Larger Y Combinator-backed Indian startups such as Razorpay, Meesho, and Zepto have no business relationships with SVB. But, startups and growing businesses are feeling the effects of the bank's demise. To avoid any market disruption, some of India's major YC enterprises have been sending funds overseas for the last two weeks.
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