MUMBAI: Indian startups had deposits worth about $1 billion with embattled Silicon Valley Bank and the country’s deputy IT minister said he had suggested that local banks lend more to them going ahead.
California banking regulators shut down Silicon Valley Bank (SVB) on March 10 after a run on the lender, which had $209 billion in assets at the end of 2022. Depositors pulled out as much as $42 billion on a single day, rendering it insolvent.
The US government eventually stepped in to ensure that depositors had access to all their funds. “The issue is, how do we make startups transition to the Indian banking system, rather than depend on the complex cross border US banking system with all of its uncertainties in the coming month?” India’s state minister for technology, Rajeev Chandrashekhar said late Thursday night in a Twitter spaces chat.
Hundreds of Indian startups had more than a billion dollars of their funds in SVB, according to his estimate, Chandrashekhar said.
Chandrashekhar met more than 460 stakeholders this week, including startups affected by SVB’s closing, and said he had passed on their suggestions to Finance Minister Nirmala Sitharaman.
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Indian banks could offer a deposit-backed credit line to startups that had funds in SVB, using those as collateral, Chandrashekhar said, citing one of the suggestions he had passed on to the Finance minister.
India has one of the world’s biggest startup markets, with many clocking multi-billion-dollar valuations in recent years and getting the backing of foreign investors, who have made bold bets on digital and other tech businesses.