'Put your funds in...': Ashwini Vaishnaw's message to Indian start-ups after Silicon Valley Bank crisis

Union Minister Ashwini Vaishnaw on Monday said the government's quick actions protected the Indian start-ups in the aftermath of the Silicon Valley Bank (SVB) collapse. He said that after the collapse of SVB, the government swung into action to handhold Indian start-ups that had funds or deposits in the bank.

"How we responded to that minor crisis is that we immediately engaged with the entire start-up community and made sure that whatever deposits they wanted to shift to Indian banks... the entire process was flawlessly executed by collaboration between different arms of Government," he said while speaking at India Global Forum.

He said not a single start-up was adversely impacted by what he called the "minor crisis". "We have requested all the start-ups, don't think about putting your funds in any bank anywhere...put your funds in India. And I will request all the Global start-up community also, think of India as your trusted banking sector," he said.

California-based SVB, which was a start-up-focused lender, collapsed on March 10 after it ran out of liquidity. Its customers, who were largely startup firms and their executives, scrambled to withdraw their money. While some succeeded, others were not able to withdraw as the regulators had taken control of the bank. However, soon the regulators assured the depositors that their money was safe.

Earlier this month, Minister of State for IT Minister Rajeev Chandrasekhar said that over a billion-dollar worth of capital 'attributable to Indian startups' was stuck in deposits at SVB when it went down. "And this is a conservative estimate. Several hundred startups were directly impacted and funds that invested in them were also impacted," the minister said while addressing a Twitter town hall.  

The minister also shared that over $250 million had been transferred from SVB to GIFT City banks. "There is newfound awe and respect for the Indian banking system," he said.

After the collapse of SVB, Chandrasekhar held a consultation with 460-plus Indian startups to understand and assess the full impact of the crisis. He said he had submitted a report on the consultations to Finance Minister Nirmala Sitharaman. "We need to see how we can move Indian startups to the Indian banking system instead of relying on complex cross-border systems," he added.

Business Today earlier reported that ICICI Bank was one of the first major banks to offer 'Startup Ecosystem Banking' to Indian startups in the wake of SVB's collapse. The private sector lender also put in place a dedicated team for startups that served them through an extensive network of branches. 

"The ‘Startup Ecosystem Banking’ proposition offers treasury and transaction banking solutions, lending solutions, digital integrations, handling FDI and regulatory compliances, personal banking services for employees and founders," the bank said in a statement.