After Silicon Valley Bank (SVB) failed, about $200 million of the $1 billion funds held by Indian startups were transferred to GIFT City, a global financial centre in Gujarat, according to Rajeev Chandrasekhar, minister of state for electronics and information technology.
According to the minister, the crisis caused by the bank’s failure is now a more manageable short-term liquidity issue rather than an existential solvency crisis confronting startups with money stuck in the bank.
“Indian startups have over $1 billion in deposits with Silicon Valley Bank. “As of this morning (Thursday), about $200 million or so of those deposits have moved to the GIFT City, IFSC,” the minister said during a fireside chat at the Lenovo Tech World.
Mint reported earlier this week that Indian startups with accounts at SVB were having difficulty moving funds out of the bank due to the suspension of international wire transfers.
Due to restrictions on overseas transfers from SVB accounts, most Indian companies that had parked funds in the United States transferred them to other US banks. Some Indian startups, particularly those with international operations, wanted to transfer funds from SVB to another overseas bank or an Indian bank registered with GIFT City.
The minister stated that the American banking system was not the “gold standard” that it was thought to be, and that Indian startups should look closer to home for funding.
“At the end of the day, I think there was a tendency for us historically to look at the American financial sector as the gold standard. It turns out that it isn’t. “The Indian banking system and financial sector are more resilient and stronger than ever before, and it should be the preferred banking partner for startups,” he said.
In response to a question about semiconductor industry investments, Chandrasekhar stated that the government would soon approve the first semiconductor fabrication investment and the first semiconductor packaging proposal.