Union electronics and information technology minister Rajeev Chandrasekhar has called for the need to create awareness and make banking systems more startup-friendly against the backdrop of the California-based Silicon Valley Bank (SVB)’s collapse.
Union minister Rajeev Chandrasekhar. (HT Photo) SVB was among the banks that offered dollar accounts and catered specifically to the startup sector.
Chandrasekhar underlined the need for the system to consider startups as an important client base. ”We have branches [of Indian banks] in the US that do corporate banking but do very little corporate banking with startups,” said Chandrasekhar on Twitter spaces on Thursday.
He added they have shared with the finance ministry a summary of the consultation with startups and suggestions for making the Indian banking system more startup-friendly.
Chandrasekhar said that the liquidity issues were being addressed. “Today what is attractive about the banking system is not their appetite to take risks instead it is their prudence which makes them strong. What startups are looking for is not risk or risky instruments…instead they are looking for safe havens where capital can be deposited,” Chandrasekhar said at a separate event on Thursday.
On Tuesday, Chandrasekhar interacted with over 450 startups Indians own or co-own, venture capitalists, industry leaders, etc on the SVB’s collapse via video conferencing. He assured them the government was focused on helping them tide over the crisis.
“The government came forward to tackle this crisis from day one and help the startups. The Prime Minister’s Office, finance minister, and RBI [Reserve Bank of India] have been tracking the events and working silently to address it,” he said.
He maintained the Indian banking system is robust. “While startups have a natural incentive to use banks like SVB, we must figure out a way to use the Indian banking system without changing your business model.”
The consultation was part of the government’s efforts to offer assistance to Indian entities linked to SVB.
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