Silicon Valley Bank collapse: Will take up SVB-linked start-up woes with finance ministry, says Rajeev Chandrasekhar

Union Minister of State for Electronics and IT Rajeev Chandrasekhar on Tuesday said that the IT Ministry will take up woes of Indian start-ups impacted by the Silicon Valley Bank collapse with the finance ministry to help them navigate through the crisis and address the immediate liquidity crunch they are facing.

In his interactions with start-ups, the minister asked them to engage with the Indian banking system, which, he said, has been very robust and assured them of resolving teething issues they may face.

Even as the US government authorities have assured of returning full money to the depositors, there is no clarity on the timelines, which will lead to a liquidity crunch in the firms that have been impacted by the SVB collapse, said the minister.

Chandrasekhar also mentioned that a list of suggestions will be shared with Finance Minister Nirmala Sitharaman and they will work closely to explore how best the start-ups' concerns can be addressed.

Most of the Indian software-as-a-services start-ups with a presence in the US and firms linked to incubator Y Combinator are among those entities who are feeling the heat of the SVB collapse.

Chandrasekhar asked start-ups to explore ways to use the Indian banking system and shared that the government will try to create a framework to help them continue to operate the way they do in the US without any hassle.

"I would certainly think that we must figure out a way of getting you to use the Indian banking system without changing your business model, how you operate in the US or your payroll in the US or your expenses in the US. We will create a separate framework and create more awareness of this in the earliest possible time," Chandrasekhar said, as per PTI.

Some of the concerns that were shared by the attendees included transfer of their US Dollar deposits to India and to US-based branches of Indian banks, among other issues.

American banks provide healthy credit lines, a start-up shared, adding that this makes it attractive for firms to bank in the US. Moreover, several venture capitalists ask the start-ups to have an account in the US for funding.

The minister said that he will take up the issue of start-ups in helping them transfer their money to Indian banks, and facilitate them with credit lines to meet immediate liquidity crunch and other issues to navigate them easily through the storm while re-emphasising on use of Indian banks for the transactions.

"I would strongly suggest that you look at the Indian banking system, because certainly, without sounding like I'm pitching for the banking system, this is the most stable. This is the most robust and my suggestion strongly is that you explore this as part of your overall operational framework," Chandrasekhar said.

(With PTI inputs)

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