BusinessThe Fall of Silicon Valley Bank

The Fall of Silicon Valley Bank

Indian start-ups are alarmed as the American bank crash

Many Indian start-up entrepreneurs who held accounts at the ailing Silicon Valley Bank (SVB). Thus, it was a lengthy wait. The Federal Deposit Insurance Corporation (FDIC) asked businesses with accounts containing more than $250,000 to contact a toll-free hotline. It is more than what US regulators, who shut down the bank, said would be covered by them.

Thus, the tech sector is SVB’s largest client, with many Indian start-ups having accounts at the bank, particularly in the SaaS (software as a service) market that caters to American clients.

Therefore, California authorities shut down the troubled lender on Friday. However, placing it under the supervision of the US Federal Deposit Insurance Corporation (FDIC). Thus, overnight shock followed another steep 60% decrease in premarket trading for SVB’s stock as anxious depositors hurried to withdraw money, which caused the dip.

Nonetheless, SVB Financial Group’s demise and FDIC takeover may have taken place in a matter of days, Experts claimed the bank was a victim of persistently high interest rates and worries about more rate increases in 2023.

During a time of historically low interest rates during the epidemic, global central banks, led by the US Federal Reserve, began rapidly hiking key rates to combat inflation. Thus, this has affected the businesses of lenders who specialize in technology and start-ups, including SVB, and reduced investor sentiment.

However, it is due to the fact that investors dislike taking risks when the money they have available to them becomes costly owing to increasing interest rates. Investors in technological start-ups, who make up the majority of SVB’s clientele, became less willing to take chances as a result of the increased interest rates.

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