However, it assured the parliamentary standing committee on finance that the impact of the bank’s collapse appears to be “limited” on the Indian startup ecosystem, as reported in the media.
Department of financial services secretary Vivek Joshi, RBI executive director Ajay Kumar Choudhary, SBI MD Alok Kumar Choudhary, officials from the Department for Promotion of Industry & Internal Trade (DPIIT) and the Indian Venture & Alternate Capital Association (IVAC) on Monday deposed before the committee chaired by BJP MP and former minister of state for finance Jayant Sinha.
In a presentation to the panel, the RBI said that due to rate hikes and tightening liquidity conditions globally, the venture capital industry was reducing or revaluating investments.
“In India too, the fundraising activity already declined 35% from $37.20 billion in 2021 to $24.70 billion in 2022. SVB’s collapse might contribute to this trend and availability of global funds to Indian startups may take a pause in the short run,” the RBI said in its presentation to the committee.
The central bank said SVB has two non-financial subsidiaries in India. The first is SVB India Advisors Pvt Ltd (SIA) – involved in legal, loan operations, accounting, book keeping, auditing, etc.
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And the second is SVB Global Services India LLP (SGSI) – a non-banking company that is primarily a technical and engineering solutions provider.When contacted, Sinha described the meeting as “satisfactory” and said Indian startups have been given access to their deposits with SVB. “The committee had a very engaging set of discussions on the collapse of important financial institutions in the US and Switzerland, and analysed their implications for India’s financial system and startups,” Sinha told ET.
He further said that Indian startups are looking to diversify their dollar deposits to financial institutions in GIFT City in Gujarat.
Sinha said there was wide agreement among the members and officials that there is a need for specialised financial services for Indian startups and many of India’s financial institutions are setting up specialised branches and products for startups. He said the committee noted that Indian banks are rock solid and very well-capitalised.
Startup-focused lender SVB Financial Group on March 10 became the largest bank to fail since the 2008 financial crisis. After its collapse, its business in the US was acquired by First Citizens Bank and its UK operations by HSBC.
Indian startups had deposits worth $1 billion in the beleaguered SVB, MoS IT Rajeev Chandrasekhar had said last month.