Over $200 million already moved to GIFT City banks: Rajeev Chandrasekhar

Indian startups have already moved over $200 million to banks in GIFT City, a financial hub in Gujarat with easier compliance norms, in the wake of the collapse of the Silicon Valley Bank, according to Union Minister Rajeev Chandrasekhar.

"I have the data on my desk that shows over $200 million has been already transferred to GIFT City banks," the Minister of State for electronics and information technology said in a Twitter space late on March 16.

Chandrasekhar also emphasised that both startups and Indian banks should figure out a way to work together as the country's banking system is one of the healthiest in the world.

"I have made a case to Finance Minister Nirmala Sitharaman that the Indian banking system can be a lot more startup friendly. There's a need for Indian banking system to consider startups as important target segment," he said.

"The silver lining in this dark cloud there is a newly found respect for Indian banking system... We have branches in the US of public sector banks, but do very little corporate banking for startups . If startups have in excess of $1 billion in the Silicon Valley Bank, it can easily be (absorbed by) even SBI or Bank of Baroda branches there," he added.

Also, in a first-of-its-kind interaction between the government and the startup community amid the crisis, the minister listened to problems and solutions suggested by startup founders and venture capital investors for almost an hour on the morning of March 14.

It is worth noting that a majority of YCombinator-backed startups, which typically deposited their income in SVB, have their working capital stuck. About 60 percent of YCombinator-funded startups have exposure to SVB.

Silicon Valley Bank’s parent SVB Financial Group informed the market late on March 8 that it sold about $21 billion of securities from its portfolio, due to which it will have an after-tax loss of $1.8 billion in the first quarter. This triggered a massive sell-off of its shares on Wall Street, triggering panic.

SVB became the largest bank to fail since the 2008 financial crisis, and was taken over by US regulators last Friday.