Indian startups had about $1 billion (roughly Rs. 8,250 crores) deposited in the troubled Silicon Valley bank and the country’s deputy IT minister said he suggested that local banks step in and lend more to them.

California banking regulators on March 10 shut down Silicon Valley Bank (SVB), which had assets of $209 billion (about Rs 17 lakh crore) at the end of 2022.

Depositors pulled out $42 billion (about Rs 3.4 lakh crore) in a single day, leaving it insolvent. The US government eventually stepped in to ensure that depositors had access to all of their funds.

“The point is, how do we transition to the Indian banking system in the coming months, instead of relying on the complex cross-border US banking system with all its uncertainties?” India’s Minister of State for Technology, Rajeev Chandrasekhar said in a Twitter space chat late on Thursday.

Chandrasekhar said that according to his estimates, hundreds of Indian startups have more than $1 billion in SVB funds.

Chandrasekhar this week met over 460 stakeholders, including startups affected by the closure of SVB, and said he has given their suggestions to Finance Minister Nirmala Sitharaman.

Citing one of the suggestions made to the finance minister, Chandrasekhar said that Indian banks could offer deposit-backed credit lines to startups holding funds in SVBs.

India is one of the world’s largest startup markets, with multi-billion dollar valuations in recent years and gaining the backing of foreign investors who have made bold bets on digital and other tech businesses.

© Thomson Reuters 2023