The Reserve Bank of India (RBI) has jumped into action days after Silicon Valley Bank’s (SVB) demise to assess its effects on Indian businesses and banks. The regulator has begun gathering data on the exposure of banks and non-banks to the collapsed Santa Clara-based lender.
The regulator is evaluating the effect that the bank’s failure in the US has had on the nation’s financial system. The collapsed lender may have exposed both banks and non-banking corporations through stock investments or deposits.
There are a few Indian banks with operations in the US, like State Bank of India (SBI), ICICI Bank, Bank of Baroda, and Bank of India.
The Federal Deposit Insurance Corporation was later named as SVB’s receiver after California’s
Department of Financial Protection and Innovation closed the 16th-largest bank in the US, SVB, on Friday 10th March. According to bankers, the exposure of Indian firms to the defunct American lender is small and shouldn’t raise any red flags. In recent years, the liquidity and capital situations of Indian banks have remained strong.
The RBI’s Financial Stability Report of December 2022 said that macro-level stress tests for credit risk showed that domestic banks would be able to comply with minimum capital requirements, even under severe stress scenarios.
The SVB bankruptcy presents an opportunity for several Indian banks to support the startup ecosystem, they say. Yet, the SVB disaster is expected to have an effect on a few Indian technology and start-up enterprises.