The Silicon Valley Bank collapse has created a sense of panic among startups and investors, as international fund transfers from the US to India are not going through, making it difficult for them to recover their deposits and transfer cash back to the country. However, Union Minister Rajeev Chandrasekhar has assured the startup community that the government is determined to ensure there is no disruption in the growth of startups.
In a first-of-its-kind interaction between the government and the startup community amid the crisis, the minister patiently listened to problems and solutions suggested by startup founders and venture capital investors for almost an hour on the morning of March 14. He assured them of help to tide over the crisis and said that he will make a list of suggestions to the Finance Ministry in this regard.
Chandrasekhar’s suggestions will include ways to extend a credit line to affected startups, making the rules for account opening in International Financial Services Centre (IFSC) banks located in GIFT City easier, and mirroring the credit products available in the US. The minister also asked entrepreneurs why they were not using the services of Indian banks, which are considered to be one of the most stable banking systems in the world. However, foreign investors prefer to transfer funds to US-based bank accounts, making it difficult for startups to use Indian banks.
The minister also addressed concerns about compliance requirements and expenses in Silicon Valley. He assured the startup community that the government will create a separate framework and create more awareness to encourage the use of the Indian banking system without changing their business model, how they operate in the US or their payroll in the US or their expenses in the US.
In conclusion, the Indian government is committed to ensuring that startups do not face any disruption in their growth despite the Silicon Valley Bank collapse. The government is working to create a separate framework to encourage startups to use Indian banks without changing their business model, and also to extend a credit line to affected startups, making the rules for account opening in IFSC banks located in GIFT City easier, and mirroring the credit products available in the US.