Silicon Valley Bank Collapse: What caused Silicon Valley Bank to fail? What impact will it have on India?

13 Mar, 2023

The Silicon Valley Bank in the US has failed. The US regulator has taken control of the bank's deposits. The result was a collapse in the global stock markets, and the Indian stock market was not immune to this. Now that this has happened, people are starting to wonder what effect it will have on India. They are aware of how the Silicon Valley Bank failed in addition to this.

The cause of SVB's collapse

A bank run, which happens when several depositors remove all of their money from a bank at once, typically out of worry for the future of the institution, was the reason behind SVB's demise. In the case of SVB, both the recent collapse in technology stocks and the Federal Reserve's aggressive desire to raise interest rates to combat inflation had a significant negative impact on the bank.

Although the specific number of Indian startups having SVB accounts is unknown, it is assumed that more than 50% of Indian SaaS businesses have a US presence, with the majority of these banks being SVB. Around a thousand enterprises have reportedly been directly harmed by the SVB bankruptcy, and many more are reportedly likely to be indirectly impacted.

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