SVB Crisis: Startups Can Approach Indian Banking System, Says Rajeev Chandrasekhar The minister also guaranteed that Indian government is working on ways to shield them from economic vulnerability
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Union minister of state for electronics and information technology Rajeev Chandrasekhar, in a meeting with over 400 startups in the backdrop of the Silicon Valley Bank (SVB) collapse, has reportedly advised that startups can approach the Indian banking system for funding without changing their business models. He also guaranteed that the Indian government is working on ways to shield them from economic vulnerability.
"Indian banking system is most stable and robust and you must explore it as part of your organisational framework. While startups have a natural incentive to use banks like SVB, we must figure out a way to use the Indian banking system without changing your business model," said Chandrasekhar in a statement.
According to reports, it is also expected to urge the finance ministry to allow overseas branches of Indian banks to accept deposits from these startups on priority.
Regarding this discussion, a senior government official told the Indian Express that, "By Tuesday evening or Wednesday morning, MeitY will send a representation to the Finance Ministry highlighting the inputs it received during the meeting. Among the recommendations would be: if Indian banks lend against the deposits that these businesses have in their SVB accounts to address their liquidity issues, and if people want to transfer money from their SVB account to an Indian bank, there should be no taxation or issues under the Foreign Exchange Management Act (FEMA)."
Also on concerns around transfer of US Dollar deposits to India and to US-based branches of Indian banks, he said that these will be shared with finance minister Nirmala Sitharaman to arrive at possible solutions.
"We will share a list of suggestions with finance minister Nirmala Sitharaman and explore how best your concerns can be addressed. We will also explore how smoothly we can facilitate the transfer of your US dollar deposits to Indian banks, IFSC centred foreign banks or any other Indian bank which has presence in the United States," he said.
While sharing the viewpoints on SVB collapse, Abhishek Agarwal, managing partner of Rockstud Capital said that, "Silicon Valley Bank's failure is a classic case of having too much on the table and getting complacent over success. The asset liabilities mismatch is the worst example for a financial institution. When dealing with public money, one needs to be mindful of following regulatory guidelines. Does it mean the US federal doesn't have one after the famous Lehman brother crisis or some kind of financial fraud took place in SVB?"