SVB crisis has sparked a debate on investing in govt bonds, says Zerodha’s Nithin Kamath

One of the topics that the Silicon Valley Bank (SVB) crisis has brought to the forefront in the US is around holding money in government bonds without taking risks, said Zerodha’s founder Nithin Kamath on Monday. 

In a LinkedIn post, the entrepreneur and investor wrote, “With the SVB crisis, there's a lot of talk in the US about the need for a bank that holds money in government bonds without taking risks. Just a simple wallet where people keep their cash, earn a reasonable interest, & make payments. What RBI intended with payments banks.”

In the post he also highlighted why payment banks in India couldn’t taste the kind of success that was expected. “Payments bank didn't pick up in India because users didn't want to pay monthly fees. Also, payments became highly competitive, with businesses undercutting each other. Also, those who took licenses saw payments bank mainly as a stepping stone to a full-fledged bank license," said Kamath. 

In the end, he encouraged everyone to check out Zerodha or the Reserve Bank of India’s platform if anyone is looking for a risk-free way to park their money. 

"If you're worried about banking issues and want a risk-free way to park your cash, check out G-secs T-bills. And the returns are higher than FDs. You can invest through @zerodhaonline or the RBI platform, but It's easier to hold them in your demat: https://coin.zerodha.com/gsec/invest," he wrote.

The SVB crisis has rocked the global business ecosystem. 

Addressing a Twitter townhall on March 16, Minister of State for IT Minister Rajeev Chandrasekhar shared 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. 

Chandrasekhar also shared that over $250 million has been transferred from SVB to GIFT City banks in the last few days. “There is new found awe and respect for the Indian banking system,” he said. 

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