Over $1 billion startup money exposed to SVB, here’s what MoS IT is doing

Union Minister Rajeev Chandrasekhar has taken up the issue of the Silicon Valley Bank (SVB) failure with Finance Minister Nirmala Sitharaman. The Minister of State for Electronics and IT has pitched for fine-tuning the Indian banking system according to the requirements of startups.

According to Chandrasekhar, deposits amounting to almost $1 billion belonging to Indian startups were with the Silicon Valley Bank (SVB). The failure of the US-based bank, which was a crucial source of funding for startups, has sent shockwaves across the global financial system.

Chandrasekhar stated during a Twitter live session that over $200 million of the startups' deposits have been transferred to GIFT City bank. He also said that there were deposits close to $1 billion in SVB that were attributable to Indian startups.

"I had kind of very empirically and anecdotally calculated that there was more than a billion dollars of startups' capital as deposits. According to some, this is a conservative estimate. There were deposits in SVB that are attributable to Indian startups close to a billion or more," the Minister of State for Electronics and IT said.

Also Read: Startups worldwide gird for life after SVB

Recently, cash-short banks have borrowed approximately $300 billion from the Federal Reserve, the central bank announced on Thursday. Almost half the money - $143 billion - went to holding companies for two major banks that failed last week, SVB and Signature Bank, triggering widespread alarm in financial markets. The Fed did not disclose the banks that received the other half of the funding or how many of them did so.

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The holding companies for the two failed banks were established by the Federal Deposit Insurance Corporation, which has taken over both banks. The money they borrowed was used to pay their uninsured depositors, with bonds owned by both banks posted as collateral. The FDIC has guaranteed the repayment of the loans, the Fed said.

The figures reveal the scale of the Fed's support to the financial sector after the two banks collapsed last weekend. The rest of the money was borrowed by banks seeking to raise cash, probably to pay off depositors who attempted to withdraw their money. Several mega banks, such as Bank of America, have reported receiving inflows of funds from smaller banks since the bank failures last weekend.

(With agency inputs)