The startup raised concerns in a meeting with the government today amid the situation arising out of the collapse of US lender Silicon Valley Bank (SVB). The startup said it is facing difficulties due to international wire transfers, US bank withdrawal limits and lack of communication with US agencies. He told the need of borrowing on preferential basis.
Minister of State for Electronics & Information Technology, Rajeev Chandrasekhar today held a virtual meeting with Startups, Venture Capitalists and Investors directly affected by the closure of SVB. He assured that the IT Ministry will list these suggestions and send them to the Finance Ministry.
According to sources, Chandrasekhar asked all the stakeholders what could be done to bring their banking operations to Indian banks or foreign banks present in the GIFT City? Suggested measures to reduce the expenditure incurred in
Most of the stakeholders present in the meeting have been able to withdraw their deposits from SVB since Monday morning but they are not able to bring their money into the country due to shutdown of international wires.
“To overcome these bottlenecks, founders need psychological support from the government as well as concerted action on a bilateral basis,” said a partner at a venture capital firm. We want the government to do something like run an operation to evacuate citizens stuck in distressed areas so that the founders can get their money back. He complained that there was no transparency about what was going on at the bank after the news of the closure broke.
Another stakeholder said that there is a major concern regarding the working capital requirement. Therefore, the government should consider providing credit facility on preferential basis for the next three months through domestic banking system or other means. “We don’t know how long it will take to get the money back and what will be the impact on the original depositors,” he said.
Sources said most of the startups raised concerns about bringing their money deposited in SVB Bank to India and the tax and regulatory compliance burden it would entail.
A partner at a leading Mumbai-based venture capital firm said that in the last few days more than a dozen companies affiliated with us have been affected. Most of them had opened their account in Silicon Valley from their base while their backend was in Bengaluru or NCR.
