India says tech startups had about $1 billion in Silicon Valley bank

India’s technology minister, Rajeev Chandrashekhar, said on Thursday that Indian tech startups had more than $1 billion in deposits at California’s Silicon Valley Bank (SVB) when the bank was shut down. close by regulators on March 10.

The figure cited by Chandrashekhar was considerably higher than India’s impression transmitted so far on his exposure to SVB. The technology minister said last Sunday he would spend the week talking to start-up executives to “understand the impact on them”, and on Thursday he said he had determined that hundreds of companies Indians had funds in the bank.

“The problem is how do you transition startups to the Indian banking system, rather than relying on the complex US cross-border banking system with all its uncertainties in the coming month?” Chandrashekhar said.

One of the suggestions Chandrashekhar received during his week-long chat with an Indian technology managerwas to “offer a deposit-backed line of credit to startups that had funds in SVB, using them as collateral.”

“We will also try to see if more credit products like in the US can be made available to you and make it easier for them to switch from SVB to any other Indian bank in the US,” he said. . said a gathering of Indian entrepreneurs and venture capitalists on Tuesday after some of the attendees came up with the idea of ​​deposit-backed credit.

“India’s banking system is the most stable and robust and you need to explore it as part of your organizational framework. While startups have a natural incentive to use banks like SVB, we need to find a way to use Indian banking system without changing your business model,” he said.

Just about every public statement by Indian ministers over the past week has underscored the stability and strength of the Indian banking system over the SVB debacle. Few wanted to dwell on the Adani Crisis, in which the vast industrial empire of billionaire Gautam Adani was accused of fraud and stock market manipulation. Indian analysts were just breathing a sigh of relief that their markets survived the crash in Adani Group shares when SVB collapsed.

Q India’s chief investment officer, Arvind Chari, asserted on Wednesday that India’s ability to weather Adani’s waves of financial blasts And SVB was a sign of the strength and resilience of the Indian system.

“Yes, India is chaotic. It is a democracy, corruption has been weeded out of its governance and its results are insufficient. However, in this chaos lurk opportunities; in Indian democracy there are checks and balances; in its corruption is the scope for a cleanup; and so India continues to disappoint optimists and pessimists alike,” he wrote.

Chari also hailed India’s household as a source of national fiscal strength, noting that Indian families carry less debt on average than other advanced economies, and tend to be “smart asset allocators”, the major part of their money being tied up in stable investments like land. and gold.

Chari said the lesson India should learn from SVB is the importance of a quick ‘resolution’.

“India now has a bankruptcy code to deal with corporate bankruptcies. It needs a financial resolution code to quickly resolve failures of financial companies,” he advised.