According to a recent news report, Silicon Valley Bank has closed its operations due to financial irregularities. Vijay Shekhar Sharma, the chief of fintech major One 97 Communications, clarified on Twitter that the bank has fully exited his company and has no current investments. He added that SVB made a total investment of $1.7 million and exited with handsome returns after selling to other private investors.
The news report had suggested that SVB had invested $7.42 billion in (Paytm) One 97 Communications and its fintech platform Paytm. Sharma clarified that SVB was one of the early investors in Paytm’s parent company.
SVB primarily focuses on lending to technology companies, providing services to venture capital and private equity firms investing in technology and biotechnology, and private banking services to high-net-worth individuals. However, the bank had recently announced a $1.75 billion share sale to cover a $1.8 billion loss incurred from selling a $21 billion bond portfolio mainly consisting of US Treasuries. This sparked questions about the bank’s ability to operate effectively.
Following the collapse of Silicon Valley Bank, which is viewed as the largest bank failure since the 2008 financial crisis, California banking regulators quickly shut it down. The bank’s share price plummeted more than 60% for two consecutive days, eroding significant wealth of investors. Reuters reported that about 89% of the bank’s $175 billion in deposits were uninsured as of 2022.
Despite the impact on the financial system, experts do not believe that the failure of Silicon Valley Bank will have any impact on the Indian banking system.