The Silicon Valley Bank Crisis: MoS Minister Rajeev Chandrasekhar To Meet With Head Of Indian Startups

The SVB crisis is the largest bank failure in the US history since the financial crisis of 2008, whose ripple effects have been felt across the world.

New Delhi: Union Minister of State for Entrepreneurship, Skill Development, Electronics and Technology Rajeev Chandrasekhar will meet the Indian startups to understand the situation and how the government could help them after the fallout of the Silicon Valley Bank crisis. He tweeted about the upcoming meeting with the Indian startups and said 'The SVB financial closure is certainly disrupting startups across world'. He further said 'Starups are an important part of New India economy'.

The Silicon Valley Bank was shutdown by the US regulator after the prices of shares collapsed drastically. The SVB crisis was the largest bank failure in the US history since the financial crisis of 2008, whose ripple effects could be felt across the world. Many indices including Asian stock market and European stock market dropped 1 to 2% due to the SVB crisis and it is expected the market will open in negative note this week.

The @SVB_Financial closure is certainly disrupting startups across world .

Startups are an imp part of #NewIndia Economy.

I will meet wth Indian Startups this week to understand impact on thm n how @narendramodi govt can help durng this crisis.#IndiaTechade @PMOIndia pic.twitter.com/1HLTwAs9IF

— Rajeev Chandrasekhar (@Rajeev_GoI) March 12, 2023

Silicon Valley Crisis Causes

As Fed has been hiking the interest rate to rein inflation in the United States, it has decreased the morale and the risk appetite of investors and they started pulling out money to meet their liquidity needs. This caused the Silicon Valley bank to look out for ways to meet the sudden liquidity demands from the clients.

Hence, the bank sold its bond portfolio mostly of US Treasuries in loss. Hereafter, it announced it would sell $2.25 billion in common equity and preferred convertible stock to fill its funding gap. It triggered investors to sell out shares and led to the drastic fall of prices. They were collapsed losing over 60-70% value in the session.

Finally, the Federal Deposit Insurance Corporation (FDIC) announced that SVB was shutdown and placed under its receivership. The FDIC added that it would seek to sell SVB's assets and that future dividend payments may be made to uninsured depositors.