{"id":230808,"date":"2023-03-13T19:45:27","date_gmt":"2023-03-13T14:15:27","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=230808"},"modified":"2023-08-28T14:34:22","modified_gmt":"2023-08-28T09:04:22","slug":"silicon-valley-bank-crisis-reasons-and-impacts","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/silicon-valley-bank-crisis-reasons-and-impacts\/","title":{"rendered":"Silicon Valley Bank crisis: Reasons and Impacts\u202f- Explained, pointwise"},"content":{"rendered":"\n<table style=\"width: 100%; border-collapse: collapse; background-color: #f7f2f2; height: 28px;\">\n<tbody>\n<tr style=\"height: 28px;\">\n<td style=\"width: 100%; height: 28px;\">For\u00a0<strong>7PM Editorial<\/strong>\u00a0Archives click<strong>\u00a0<a href=\"https:\/\/forumias.com\/blog\/7-pm-editorials\/\" target=\"_blank\" rel=\"noopener\">HERE <\/a>\u2192<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><b><span data-contrast=\"none\">Introduction<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:true,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<p>Recently, the California-based Silicon Valley Bank (SVB), a cornerstone of the US technology and startup industries, has failed. This marks the biggest bank failure since the 2008 financial crisis. <span data-contrast=\"none\">The<\/span> Silicon Valley Bank crisis has resulted in the <span data-contrast=\"none\">subsequent<\/span> <span data-contrast=\"none\">seizure<\/span> <span data-contrast=\"none\">of<\/span> SVB <span data-contrast=\"none\">assets<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">regulators<\/span>\u00a0<span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">generated<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">global<\/span> <span data-contrast=\"none\">wave<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">risk<\/span> <span data-contrast=\"none\">aversion,<\/span> <span data-contrast=\"none\">particularly<\/span> <span data-contrast=\"none\">among<\/span> <span data-contrast=\"none\">start-ups, including Indian startups.\u00a0<\/span><\/p>\n<h2><strong>About the Silicon Valley Bank Crisis<\/strong><\/h2>\n<figure id=\"attachment_230809\" aria-describedby=\"caption-attachment-230809\" style=\"width: 440px\" class=\"wp-caption alignleft\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-230809\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=440%2C460&#038;ssl=1\" alt=\"SVB Crisis\" width=\"440\" height=\"460\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?w=2500&amp;ssl=1 2500w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=287%2C300&amp;ssl=1 287w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=978%2C1024&amp;ssl=1 978w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=768%2C804&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=1467%2C1536&amp;ssl=1 1467w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=1956%2C2048&amp;ssl=1 1956w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?resize=1568%2C1641&amp;ssl=1 1568w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts-2.png?w=2250&amp;ssl=1 2250w\" sizes=\"auto, (max-width: 440px) 100vw, 440px\" \/><figcaption id=\"caption-attachment-230809\" class=\"wp-caption-text\">Source: ET<\/figcaption><\/figure>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">After<\/span> the\u00a0<span data-contrast=\"none\">pandemic<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">2021,<\/span> the\u00a0<span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">Federal<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">adopted<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">easy<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">policy<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">pump<\/span> <span data-contrast=\"none\">huge<\/span> <span data-contrast=\"none\">money<\/span> into\u00a0<span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">market.<\/span> <span data-contrast=\"none\">During<\/span> <span data-contrast=\"none\">this<\/span> <span data-contrast=\"none\">period<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">deposits<\/span> <span data-contrast=\"none\">also<\/span> <span data-contrast=\"none\">increased<\/span><span data-contrast=\"none\">.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Subsequently,<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">decided<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">heavily<\/span> <span data-contrast=\"none\">invest<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">bond<\/span> <span data-contrast=\"none\">market,<\/span> <span data-contrast=\"none\">where<\/span> <span data-contrast=\"none\">bonds<\/span> <span data-contrast=\"none\">had<\/span> <span data-contrast=\"none\">been<\/span> <span data-contrast=\"none\">issued<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">lower<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">After<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">period<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">record<\/span> low-interest\u00a0<span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">during<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">pandemic,<\/span> <span data-contrast=\"none\">central<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">around<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">world,<\/span> <span data-contrast=\"none\">led<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">Federal<\/span> <span data-contrast=\"none\">Reserve,<\/span> <span data-contrast=\"none\">started<\/span> <span data-contrast=\"none\">raising<\/span> <span data-contrast=\"none\">key<\/span> <span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">aggressively<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">tackle<\/span> <span data-contrast=\"none\">inflation.<\/span> <span data-contrast=\"none\">This<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">dampened<\/span> <span data-contrast=\"none\">investor<\/span> <span data-contrast=\"none\">sentiments<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">also<\/span> <span data-contrast=\"none\">hit<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">businesses<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">tech<\/span> <span data-contrast=\"none\">and<\/span> start-up-focused\u00a0<span data-contrast=\"none\">lenders<\/span> <span data-contrast=\"none\">like<\/span> <span data-contrast=\"none\">SVB.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">This<\/span> <span data-contrast=\"none\">is<\/span> <span data-contrast=\"none\">because<\/span> <span data-contrast=\"none\">investors<\/span> <span data-contrast=\"none\">do<\/span> <span data-contrast=\"none\">not<\/span> <span data-contrast=\"none\">like<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">take<\/span> <span data-contrast=\"none\">risks<\/span> <span data-contrast=\"none\">when<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">available<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">them<\/span> <span data-contrast=\"none\">becomes<\/span> <span data-contrast=\"none\">expensive<\/span> <span data-contrast=\"none\">due<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">higher<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates.<\/span> <span data-contrast=\"none\">As<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">result<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">higher<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates,<\/span> <span data-contrast=\"none\">investors<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">technology<\/span> <span data-contrast=\"none\">start-ups <\/span><span data-contrast=\"none\">became<\/span> <span data-contrast=\"none\">reluctant<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">take<\/span> <span data-contrast=\"none\">risks.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">As<\/span> <span data-contrast=\"none\">higher<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">led<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">funding<\/span> <span data-contrast=\"none\">crunch<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">technology<\/span> <span data-contrast=\"none\">start-ups,<\/span> <span data-contrast=\"none\">SVB\u2019s<\/span> <span data-contrast=\"none\">clients<\/span> <span data-contrast=\"none\">started<\/span> <span data-contrast=\"none\">pulling<\/span> <span data-contrast=\"none\">out<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">meet<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">liquidity<\/span> <span data-contrast=\"none\">needs.<\/span><span data-contrast=\"none\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">Under<\/span> <span data-contrast=\"none\">this<\/span> <span data-contrast=\"none\">pressure<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">meet<\/span> <span data-contrast=\"none\">customer<\/span> <span data-contrast=\"none\">withdrawals,<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">sold<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">$21<\/span> <span data-contrast=\"none\">billion<\/span> <span data-contrast=\"none\">portfolio<\/span> <span data-contrast=\"none\">consisting<\/span> <span data-contrast=\"none\">mostly<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">Treasuries<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">huge<\/span> <span data-contrast=\"none\">loss<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">$1.8<\/span> <span data-contrast=\"none\">billion.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">Moody\u2019s<\/span> <span data-contrast=\"none\">immediately<\/span> <span data-contrast=\"none\">downgraded<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">bank\u2019s<\/span> <span data-contrast=\"none\">credit<\/span> <span data-contrast=\"none\">rating<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">Baa1<\/span> <span data-contrast=\"none\">negative<\/span> <span data-contrast=\"none\">outlook<\/span> <span data-contrast=\"none\">from<\/span> <span data-contrast=\"none\">A3.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">This<\/span> <span data-contrast=\"none\">was<\/span> <span data-contrast=\"none\">followed<\/span> <span data-contrast=\"none\">by<\/span> further losses to SVB.\u00a0<span data-contrast=\"none\">To<\/span> <span data-contrast=\"none\">fill<\/span> <span data-contrast=\"none\">this<\/span> <span data-contrast=\"none\">loss,<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">announced<\/span> <span data-contrast=\"none\">it<\/span> <span data-contrast=\"none\">would<\/span> <span data-contrast=\"none\">sell<\/span> <span data-contrast=\"none\">$2.25<\/span> <span data-contrast=\"none\">billion<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">common<\/span> <span data-contrast=\"none\">equity<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">preferred<\/span> <span data-contrast=\"none\">convertible<\/span> <span data-contrast=\"none\">stock.<\/span> <span data-contrast=\"none\">This<\/span> <span data-contrast=\"none\">sudden<\/span> <span data-contrast=\"none\">announcement <\/span><span data-contrast=\"none\">triggered<\/span> <span data-contrast=\"none\">concerns<\/span> <span data-contrast=\"none\">about<\/span> <span data-contrast=\"none\">its<\/span> <span data-contrast=\"none\">balance<\/span> <span data-contrast=\"none\">sheet<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">its<\/span> <span data-contrast=\"none\">shares<\/span> <span data-contrast=\"none\">plummeted<\/span> <span data-contrast=\"none\">60%<\/span><span data-contrast=\"none\">.\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">SVB<\/span><\/span> also failed to find <span class=\"TextRun SCXW146431386 BCX0\" lang=\"FR-FR\" xml:lang=\"FR-FR\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">alternative<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"FR-FR\" xml:lang=\"FR-FR\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">sources.<\/span><\/span> Hence, <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">it<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">ended<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">up<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">being<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">shut<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">down<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">by<\/span><\/span> <span class=\"TextRun SCXW146431386 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW146431386 BCX0\" data-ccp-parastyle=\"Body\">regulators, following which it was handed over to the FDIC.<\/span><\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"2\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:180,&quot;335559991&quot;:180,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">The<\/span> <span data-contrast=\"none\">FDIC<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">added<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">it<\/span> <span data-contrast=\"none\">would<\/span> <span data-contrast=\"none\">seek<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">sell<\/span> <span data-contrast=\"none\">SVB\u2019s<\/span> <span data-contrast=\"none\">assets,<\/span> <span data-contrast=\"none\">adding<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">future<\/span> <span data-contrast=\"none\">dividend<\/span> <span data-contrast=\"none\">payments<\/span> <span data-contrast=\"none\">may<\/span> <span data-contrast=\"none\">be<\/span> <span data-contrast=\"none\">made<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">uninsured<\/span> <span data-contrast=\"none\">depositors.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<h2><b><span data-contrast=\"none\">What is the reason behind Silicon Valley Bank Crisis?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:true,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<figure id=\"attachment_230810\" aria-describedby=\"caption-attachment-230810\" style=\"width: 469px\" class=\"wp-caption alignleft\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-230810\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=469%2C600&#038;ssl=1\" alt=\"Silicon Valley Bank crisis \" width=\"469\" height=\"600\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?w=2500&amp;ssl=1 2500w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=234%2C300&amp;ssl=1 234w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=800%2C1024&amp;ssl=1 800w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=768%2C983&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=1200%2C1536&amp;ssl=1 1200w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=1600%2C2048&amp;ssl=1 1600w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?resize=1568%2C2007&amp;ssl=1 1568w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?w=1500&amp;ssl=1 1500w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2023\/03\/Silicon-Valley-Bank-crisis-Reasons-and-Impacts.png?w=2250&amp;ssl=1 2250w\" sizes=\"auto, (max-width: 469px) 100vw, 469px\" \/><figcaption id=\"caption-attachment-230810\" class=\"wp-caption-text\">Source: ET<\/figcaption><\/figure>\n<p><strong>Aggressive raising interest rates<\/strong><span data-contrast=\"none\">:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">Global<\/span> <span data-contrast=\"none\">borrowing<\/span> <span data-contrast=\"none\">costs<\/span> <span data-contrast=\"none\">have<\/span> <span data-contrast=\"none\">risen<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">fastest<\/span> <span data-contrast=\"none\">pace<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">decades<\/span> <span data-contrast=\"none\">over<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">last<\/span> <span data-contrast=\"none\">year<\/span> <span data-contrast=\"none\">as<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">Federal<\/span> <span data-contrast=\"none\">Reserve<\/span> <span data-contrast=\"none\">lifted<\/span> U.S. rates\u00a0<span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">450<\/span> <span data-contrast=\"none\">basis<\/span> <span data-contrast=\"none\">points<\/span> <span data-contrast=\"none\">from<\/span> <span data-contrast=\"none\">near<\/span> <span data-contrast=\"none\">zero,<\/span> <span data-contrast=\"none\">while<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">European<\/span> <span data-contrast=\"none\">Central<\/span> <span data-contrast=\"none\">Bank<\/span> <span data-contrast=\"none\">hiked<\/span> <span data-contrast=\"none\">the<\/span> eurozone\u00a0<span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">300<\/span> <span data-contrast=\"none\">bps.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Due<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">this<\/span><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">value<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">existing<\/span> <span data-contrast=\"none\">bonds<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">were<\/span> <span data-contrast=\"none\">issued<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">lower<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">fallen.<\/span> <span data-contrast=\"none\">Banks,<\/span> <span data-contrast=\"none\">which<\/span> <span data-contrast=\"none\">bought<\/span> <span data-contrast=\"none\">these<\/span> <span data-contrast=\"none\">bonds<\/span> <span data-contrast=\"none\">are<\/span> <span data-contrast=\"none\">sitting<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">steep<\/span> <span data-contrast=\"none\">unrealised<\/span> <span data-contrast=\"none\">losses.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">Another<\/span> <span data-contrast=\"none\">facet<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">rising<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">was<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">decline<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">funding<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">startups<\/span> <span data-contrast=\"none\">as<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">venture<\/span> <span data-contrast=\"none\">capital<\/span> <span data-contrast=\"none\">ecosystem<\/span> <span data-contrast=\"none\">don\u2019t<\/span> <span data-contrast=\"none\">want<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">take<\/span> <span data-contrast=\"none\">risk.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><strong>Heavy investment in long-term government bonds<\/strong><span data-contrast=\"none\">:<\/span> <span data-contrast=\"none\">SVB&#8217;s<\/span> <span data-contrast=\"none\">invest<\/span> <span data-contrast=\"none\">heavily<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">government<\/span> <span data-contrast=\"none\">bonds<\/span><span data-contrast=\"none\">.<\/span> <span data-contrast=\"none\">A<\/span> <span data-contrast=\"none\">spike<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">interest<\/span> <span data-contrast=\"none\">rates<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">led<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">sell-off<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">bonds,<\/span> <span data-contrast=\"none\">leaving<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">exposed<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">potential<\/span> <span data-contrast=\"none\">losses<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">securities<\/span> <span data-contrast=\"none\">they<\/span> <span data-contrast=\"none\">hold.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>A downturn in technology stocks<\/strong><span data-contrast=\"none\">: <\/span><span data-contrast=\"none\">Silicon<\/span> <span data-contrast=\"none\">Valley<\/span> <span data-contrast=\"none\">Bank<\/span> <span data-contrast=\"none\">was<\/span> <span data-contrast=\"none\">hit<\/span> <span data-contrast=\"none\">hard<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">downturn<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">technology<\/span> <span data-contrast=\"none\">stocks<\/span> <span data-contrast=\"none\">over<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">past<\/span> <span data-contrast=\"none\">year.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>\u201cRun on the <\/strong><span data-contrast=\"none\"><strong>bank\u201d<\/strong>: The<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">failed<\/span> <span data-contrast=\"none\">after<\/span> <span data-contrast=\"none\">depositors<\/span> <span data-contrast=\"none\">\u2014<\/span> <span data-contrast=\"none\">mostly<\/span> <span data-contrast=\"none\">technology<\/span> <span data-contrast=\"none\">workers<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">venture<\/span> <span data-contrast=\"none\">capital-backed<\/span> <span data-contrast=\"none\">companies<\/span> <span data-contrast=\"none\">\u2014<\/span> <span data-contrast=\"none\">began<\/span> <span data-contrast=\"none\">withdrawing<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">panic,<\/span> <span data-contrast=\"none\">creating<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">\u201crun<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">bank\u201d.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>Soft <\/strong><span data-contrast=\"none\"><strong>Regulations<\/strong>:<\/span> <span data-contrast=\"none\">In<\/span> <span data-contrast=\"none\">2018,<\/span> <span data-contrast=\"none\">regulations<\/span> <span data-contrast=\"none\">were<\/span> <span data-contrast=\"none\">loosened<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">regional<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">like<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">\u2013<\/span> <span data-contrast=\"none\">among<\/span> <span data-contrast=\"none\">other<\/span> <span data-contrast=\"none\">things,<\/span> <span data-contrast=\"none\">it<\/span> <span data-contrast=\"none\">reduced<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">amount<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">potential<\/span> <span data-contrast=\"none\">loss<\/span> <span data-contrast=\"none\">reserves<\/span> <span data-contrast=\"none\">mandated<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">these<\/span> <span data-contrast=\"none\">banks.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<h2><b><span data-contrast=\"none\">What will be the potential impact of the Silicon Valley Bank Crisis on the World Economy?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:true,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<p><strong>Impacts on small <\/strong><span data-contrast=\"none\"><strong>businesses<\/strong>:<\/span> <span data-contrast=\"none\">According<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">petition<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">government,<\/span> <span data-contrast=\"none\">around<\/span> <span data-contrast=\"none\">10,000<\/span> <span data-contrast=\"none\">small<\/span> <span data-contrast=\"none\">businesses<\/span> <span data-contrast=\"none\">with<\/span> <span data-contrast=\"none\">accounts<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">Silicon<\/span> <span data-contrast=\"none\">Valley<\/span> <span data-contrast=\"none\">Bank<\/span> <span data-contrast=\"none\">may<\/span> <span data-contrast=\"none\">be<\/span> <span data-contrast=\"none\">unable<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">pay<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">employees<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">next<\/span> <span data-contrast=\"none\">30<\/span> <span data-contrast=\"none\">days,<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">approximately<\/span> <span data-contrast=\"none\">1<\/span> <span data-contrast=\"none\">lakh<\/span> <span data-contrast=\"none\">jobs<\/span> <span data-contrast=\"none\">are<\/span> <span data-contrast=\"none\">anticipated<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">be<\/span> <span data-contrast=\"none\">affected<\/span> <span data-contrast=\"none\">as<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">result<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">collapse.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>Impact the technology <\/strong><span data-contrast=\"none\"><strong>industry<\/strong>:<\/span> <span data-contrast=\"none\">It<\/span> <span data-contrast=\"none\">will<\/span> <span data-contrast=\"none\">immediately<\/span> <span data-contrast=\"none\">impact<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">technology<\/span> <span data-contrast=\"none\">industry<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">competitiveness<\/span> <span data-contrast=\"none\">worldwide<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">ultimately<\/span> <span data-contrast=\"none\">set<\/span> <span data-contrast=\"none\">back<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">competitiveness<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">decade<\/span> <span data-contrast=\"none\">or<\/span> <span data-contrast=\"none\">more.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>Can trigger a run on the <\/strong><span data-contrast=\"none\"><strong>bank<\/strong>: Its<\/span> <span data-contrast=\"none\">collapse<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">already<\/span> <span data-contrast=\"none\">instilled<\/span> <span data-contrast=\"none\">fear<\/span> <span data-contrast=\"none\">among<\/span> <span data-contrast=\"none\">founders<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">management<\/span> <span data-contrast=\"none\">teams<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">look<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">safer<\/span> <span data-contrast=\"none\">havens<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">remaining<\/span> <span data-contrast=\"none\">cash,<\/span> <span data-contrast=\"none\">which<\/span> <span data-contrast=\"none\">can<\/span> <span data-contrast=\"none\">trigger<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">run<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">every<\/span> <span data-contrast=\"none\">other<\/span> <span data-contrast=\"none\">smaller<\/span> <span data-contrast=\"none\">bank.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>Vulnerability to the rising cost of <\/strong><span data-contrast=\"none\"><strong>money<\/strong>:<\/span> <span data-contrast=\"none\">The<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">crisis<\/span> <span data-contrast=\"none\">spread<\/span> <span data-contrast=\"none\">concern<\/span> <span data-contrast=\"none\">about<\/span> <span data-contrast=\"none\">hidden<\/span> <span data-contrast=\"none\">risks<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">banking<\/span> <span data-contrast=\"none\">sector<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">its<\/span> <span data-contrast=\"none\">vulnerability<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">rising<\/span> <span data-contrast=\"none\">cost<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">money.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<h2><b><span data-contrast=\"none\">What will be the potential impact of the SVB Crisis on India?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:true,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"none\">According\u00a0to\u00a0some\u00a0experts,\u00a0India\u00a0is\u00a0<strong>unlikely\u00a0to\u00a0be\u00a0affected\u00a0<\/strong>by\u00a0any\u00a0contagion\u00a0effects.\u00a0This is<\/span>\u00a0<span data-contrast=\"none\">because:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">Indian<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">have<\/span> <span data-contrast=\"none\">minimal<\/span> <span data-contrast=\"none\">exposure<\/span> <span data-contrast=\"none\">to<\/span>\u00a0<span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">lenders.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">In<\/span> <span data-contrast=\"none\">its<\/span> <strong><a href=\"https:\/\/forumias.com\/blog\/what-the-rbis-financial-stability-report-reveals-about-the-banking-sector\/\">2022 Financial Stability Report (FSR)<\/a><\/strong><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">Reserve<\/span> <span data-contrast=\"none\">Bank<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">India<\/span> <span data-contrast=\"none\">(RBI)<\/span> <span data-contrast=\"none\">said<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">macro-level<\/span> <span data-contrast=\"none\">stress<\/span> <span data-contrast=\"none\">tests<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">credit<\/span> <span data-contrast=\"none\">risk<\/span> <span data-contrast=\"none\">showed<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">domestic<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">would<\/span> <span data-contrast=\"none\">be<\/span> <span data-contrast=\"none\">able<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">comply<\/span> <span data-contrast=\"none\">with<\/span> <span data-contrast=\"none\">minimum<\/span> <span data-contrast=\"none\">capital<\/span> <span data-contrast=\"none\">requirements<\/span> <span data-contrast=\"none\">even<\/span> <span data-contrast=\"none\">under<\/span> <span data-contrast=\"none\">severe-stress<\/span> <span data-contrast=\"none\">scenarios.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><strong>Improved capital-to-risk-weighted-assets ratio (CRAR)<\/strong><span data-contrast=\"none\">: The<\/span> <span data-contrast=\"none\">system-level<\/span> <span data-contrast=\"none\">CRAR<\/span>\u00a0<span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">2023,<\/span> <span data-contrast=\"none\">under<\/span> <span data-contrast=\"none\">baseline,<\/span> <span data-contrast=\"none\">medium<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">severe<\/span> <span data-contrast=\"none\">stress<\/span> <span data-contrast=\"none\">scenarios,<\/span> <span data-contrast=\"none\">is<\/span> <span data-contrast=\"none\">projected<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">14.9%<\/span><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">14%<\/span>\u00a0<span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">13.1%<\/span><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">respectively,<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">RBI<\/span> <span data-contrast=\"none\">said.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><em><strong>Note<\/strong>: The minimum regulatory requirement for CRAR for scheduled commercial banks is 9%. Adding on a counter-cyclical buffer, the requirement is 11.50%.\u00a0<\/em><\/p>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><strong>Improvement in <\/strong><span data-contrast=\"none\"><strong>NPA<\/strong>:<\/span> <span data-contrast=\"none\">Banks<\/span> <span data-contrast=\"none\">have<\/span> <span data-contrast=\"none\">stepped<\/span> <span data-contrast=\"none\">up<\/span> <span data-contrast=\"none\">efforts<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">clean<\/span> <span data-contrast=\"none\">up<\/span> <span data-contrast=\"none\">asset<\/span> <span data-contrast=\"none\">quality and their profitability has also improved. Further,<\/span>\u00a0<span data-contrast=\"none\">gross<\/span> <span data-contrast=\"none\">NPAs<\/span> <span data-contrast=\"none\">were<\/span> <span data-contrast=\"none\">at<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">seven-year<\/span> <span data-contrast=\"none\">low<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">5%<\/span>\u00a0<span data-contrast=\"none\">as<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">September<\/span> <span data-contrast=\"none\">2022<\/span><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">The<\/span> <span data-contrast=\"none\">increase<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">10-year<\/span> <span data-contrast=\"none\">yield<\/span> <span data-contrast=\"none\">has<\/span> <span data-contrast=\"none\">been<\/span> <span data-contrast=\"none\">less<\/span> <span data-contrast=\"none\">than<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">policy<\/span> <span data-contrast=\"none\">rate<\/span> <span data-contrast=\"none\">hikes<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">RBI.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">Banks<\/span> <span data-contrast=\"none\">have<\/span> <span data-contrast=\"none\">sharply<\/span> <span data-contrast=\"none\">reduced<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">modified<\/span> <span data-contrast=\"none\">duration<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">bond<\/span> <span data-contrast=\"none\">portfolios<\/span> <span data-contrast=\"none\">over<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">last<\/span> <span data-contrast=\"none\">six<\/span> <span data-contrast=\"none\">years,<\/span> <span data-contrast=\"none\">according<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">latest<\/span> <span data-contrast=\"none\">RBI<\/span> <span data-contrast=\"none\">data.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><em><strong>Note<\/strong>: Modified duration refers to the change in the value of a bond when interest rates change. The higher the modified duration of the\u00a0bond portfolio, the more the risk of incurring losses when bond yields rise.\u00a0<\/em><\/p>\n<p><strong>Benefits for the Indian economy from the SVB crisis:<\/strong><\/p>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\"><strong>Boom for emerging markets<\/strong>: <\/span><span data-contrast=\"none\">A<\/span> <span data-contrast=\"none\">fall<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">bond<\/span> <span data-contrast=\"none\">yields<\/span> <span data-contrast=\"none\">typically<\/span> <span data-contrast=\"none\">improves<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">appeal<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">higher-yielding<\/span> <span data-contrast=\"none\">fixed-income<\/span> <span data-contrast=\"none\">assets<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">emerging<\/span> <span data-contrast=\"none\">markets.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\"><strong>Bring corporates back to India<\/strong>: Falling<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">dollar<\/span> <span data-contrast=\"none\">rates<\/span> coupled with SVB Crisis might <span data-contrast=\"none\">bring<\/span> <span data-contrast=\"none\">back<\/span> <span data-contrast=\"none\">big<\/span> <span data-contrast=\"none\">corporates<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">India,<\/span> <span data-contrast=\"none\">who<\/span> <span data-contrast=\"none\">had<\/span> <span data-contrast=\"none\">shifted<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">overseas<\/span> <span data-contrast=\"none\">lending<\/span> <span data-contrast=\"none\">due<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">depreciation<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">Indian<\/span> <span data-contrast=\"none\">National<\/span> <span data-contrast=\"none\">Rupee<\/span> <span data-contrast=\"none\">(INR)<\/span> <span data-contrast=\"none\">against<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">US<\/span> <span data-contrast=\"none\">dollar.&#8221;<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><strong>Impacts on Indian <\/strong><span data-contrast=\"none\"><strong>start-ups:<\/strong><\/span><\/p>\n<ul>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Most<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">named<\/span> <span data-contrast=\"none\">Indian<\/span> <span data-contrast=\"none\">startups<\/span> <span data-contrast=\"none\">got<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">from<\/span> <span data-contrast=\"none\">SVB,<\/span> <span data-contrast=\"none\">they<\/span> <span data-contrast=\"none\">are<\/span> <span data-contrast=\"none\">not<\/span> <span data-contrast=\"none\">depositors.<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">either<\/span> <span data-contrast=\"none\">lent<\/span> <span data-contrast=\"none\">them<\/span> <span data-contrast=\"none\">money<\/span> <span data-contrast=\"none\">(as<\/span> <span data-contrast=\"none\">venture<\/span> <span data-contrast=\"none\">debt)<\/span> <span data-contrast=\"none\">or<\/span> <span data-contrast=\"none\">invested<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">them<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">form<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">equity.<\/span> <span data-contrast=\"none\">It<\/span> <span data-contrast=\"none\">realised<\/span> <span data-contrast=\"none\">its<\/span> <span data-contrast=\"none\">profits<\/span> <span data-contrast=\"none\">via<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">sale<\/span> <span data-contrast=\"none\">or<\/span> <span data-contrast=\"none\">got<\/span> <span data-contrast=\"none\">repaid<\/span> <span data-contrast=\"none\">by<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">companies,<\/span> <span data-contrast=\"none\">depending<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">structure.<\/span> <span data-contrast=\"none\">Therefore<\/span><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">there<\/span> <span data-contrast=\"none\">is<\/span> <span data-contrast=\"none\">no<\/span> <span data-contrast=\"none\">impact<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">start-ups<\/span> <span data-contrast=\"none\">themselves.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u2022\" data-font=\"Kailasa Regular\" data-listid=\"4\" data-list-defn-props=\"{&quot;201340374&quot;:2,&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:240,&quot;335559991&quot;:240,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u2022&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">However, some<\/span> <span data-contrast=\"none\">start-ups<\/span> <span data-contrast=\"none\">with<\/span> <span data-contrast=\"none\">deposits<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">are<\/span> <span data-contrast=\"none\">impacted. For<\/span> <span data-contrast=\"none\">example,<\/span> <span data-contrast=\"none\">among<\/span> <span data-contrast=\"none\">its<\/span> <span data-contrast=\"none\">most<\/span> <span data-contrast=\"none\">notable<\/span> <span data-contrast=\"none\">funding<\/span> <span data-contrast=\"none\">was<\/span> <span data-contrast=\"none\">an<\/span> <span data-contrast=\"none\">investment<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">a<\/span> <span data-contrast=\"none\">total<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">$1.7<\/span> <span data-contrast=\"none\">million<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">One97<\/span> <span data-contrast=\"none\">Communications,<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">parent<\/span> <span data-contrast=\"none\">company<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">Paytm.<\/span> <span data-contrast=\"none\">Other<\/span> <span data-contrast=\"none\">start-ups<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">had<\/span> <span data-contrast=\"none\">received<\/span> <span data-contrast=\"none\">funding<\/span> <span data-contrast=\"none\">from<\/span> <span data-contrast=\"none\">SVB<\/span> <span data-contrast=\"none\">include<\/span><span data-contrast=\"none\">\u202f<\/span><span data-contrast=\"none\">Bluestone<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">Carwale.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<h2><b><span data-contrast=\"none\">What should be done to prevent big bank failures?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:true,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"none\"><strong>Maintain constant vigil<\/strong>: All<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">stakeholders,<\/span> <span data-contrast=\"none\">including<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">boards,<\/span> <span data-contrast=\"none\">auditors<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">regulator<\/span> <span data-contrast=\"none\">have<\/span> <span data-contrast=\"none\">to<\/span> <span data-contrast=\"none\">maintain<\/span> <span data-contrast=\"none\">constant<\/span> <span data-contrast=\"none\">vigil,<\/span> <span data-contrast=\"none\">given<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">high<\/span> <span data-contrast=\"none\">stakes<\/span> <span data-contrast=\"none\">for<\/span> <span data-contrast=\"none\">safety<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">stability.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p>Indian banks should keep capital as measured under the current Basel regime (international standards set by bank regulators).<\/p>\n<p><span data-contrast=\"none\"><strong>Ensure Cooperation and coordination<\/strong>: Cooperation<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">coordination<\/span> <span data-contrast=\"none\">among<\/span> <span data-contrast=\"none\">all<\/span> <span data-contrast=\"none\">central<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">will<\/span> <span data-contrast=\"none\">be<\/span> <span data-contrast=\"none\">helpful<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">bringing<\/span> <span data-contrast=\"none\">transparency<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">accountability<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">also<\/span> <span data-contrast=\"none\">help<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">minimising<\/span> <span data-contrast=\"none\">the<\/span> spillover\u00a0<span data-contrast=\"none\">effect<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">failure<\/span><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\"><strong>Ensure proper selection<\/strong>: The selection of the board of directors has to be prudent. The auditors&#8217; selection has to be done with care.\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Board<\/span> <span data-contrast=\"none\">members<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">banks<\/span> <span data-contrast=\"none\">usually<\/span> <span data-contrast=\"none\">spend<\/span> <span data-contrast=\"none\">most<\/span> <span data-contrast=\"none\">of<\/span> <span data-contrast=\"none\">their<\/span> <span data-contrast=\"none\">meeting<\/span> <span data-contrast=\"none\">time<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">governance<\/span> <span data-contrast=\"none\">issues,<\/span> <span data-contrast=\"none\">business<\/span> <span data-contrast=\"none\">updates,<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">\u201c<\/span><span data-contrast=\"none\">problem<\/span> <span data-contrast=\"none\">children.\u201d<\/span> <span data-contrast=\"none\">They<\/span> <span data-contrast=\"none\">should<\/span> <span data-contrast=\"none\">focus<\/span> <span data-contrast=\"none\">instead<\/span> <span data-contrast=\"none\">on<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">businesses<\/span> <span data-contrast=\"none\">that<\/span> <span data-contrast=\"none\">use<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">most<\/span> <span data-contrast=\"none\">capital.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><strong>Strict actions from central banks<\/strong><span data-contrast=\"none\">:<\/span> The central bank has to continuously monitor the lending institutions on various parameters including fit and proper.\u00a0<span data-contrast=\"none\">While<\/span> <span data-contrast=\"none\">supervising<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">banks<\/span><span data-contrast=\"none\">,<\/span> the <span data-contrast=\"none\">Central<\/span> <span data-contrast=\"none\">bank<\/span> <span data-contrast=\"none\">should<\/span> <span data-contrast=\"none\">not<\/span> <span data-contrast=\"none\">avoid<\/span> <span data-contrast=\"none\">any<\/span> <span data-contrast=\"none\">loopholes<\/span> <span data-contrast=\"none\">in<\/span> <span data-contrast=\"none\">the<\/span> <span data-contrast=\"none\">management<\/span> <span data-contrast=\"none\">and<\/span> <span data-contrast=\"none\">should<\/span> <span data-contrast=\"none\">take<\/span> <span data-contrast=\"none\">strict<\/span> <span data-contrast=\"none\">action<\/span> <span data-contrast=\"none\">against<\/span> <span data-contrast=\"none\">them.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245417&quot;:true,&quot;134245418&quot;:false,&quot;134245529&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559731&quot;:0,&quot;335559737&quot;:0,&quot;335559740&quot;:288}\"><strong>Sources<\/strong>: Live Mint (<a href=\"https:\/\/www.livemint.com\/market\/stock-market-news\/will-silicon-valley-bank-svb-crisis-could-dictate-indian-stock-market-next-week-11678513742437.html\">Article 1<\/a> and <a href=\"https:\/\/www.livemint.com\/companies\/news\/svb-crisis-to-impact-over-10-000-startups-trigger-1-lakh-layoffs-y-combinator-11678557688839.html\">Article 2<\/a>), Economic Times (<a href=\"https:\/\/economictimes.indiatimes.com\/tech\/newsletters\/ettech-unwrapped\/the-collapse-of-silicon-valley-bank-and-its-impact-on-indian-startups\/articleshow\/98554339.cms?from=mdr\">Article 1<\/a> and <a href=\"https:\/\/m.economictimes.com\/markets\/stocks\/news\/banks-sucked-into-global-rout-as-svb-crisis-spooks-investors\/articleshow\/98547486.cms\">Article 2<\/a>), <a href=\"https:\/\/www.thehindu.com\/news\/international\/explained-what-caused-silicon-valley-banks-failure\/article66606700.ece\">The Hindu<\/a>, <a href=\"https:\/\/www.business-standard.com\/article\/finance\/banks-financial-sector-unlikely-to-be-rattled-by-svb-collapse-analysts-123031200727_1.html#:~:text=The%20recent%20run%20on%20the,any%20contagion%20effects%2C%20said%20analysts.\">Business Standard<\/a>, and <a href=\"https:\/\/epaper.timesgroup.com\/article-share?article=13_03_2023_012_006_toim_TOI\">Times of India<\/a>.<\/span><\/p>\n<p><strong>Syllabus<\/strong>: GS &#8211; 3: Economic development &#8211; Effects of liberalization on the economy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>For\u00a07PM Editorial\u00a0Archives click\u00a0HERE \u2192 Introduction\u00a0 Recently, the California-based Silicon Valley Bank (SVB), a cornerstone of the US technology and startup industries, has failed. This marks the biggest bank failure since the 2008 financial crisis. The Silicon Valley Bank crisis has resulted in the subsequent seizure of SVB assets by regulators\u00a0has generated a global wave of&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/silicon-valley-bank-crisis-reasons-and-impacts\/\">Continue reading <span class=\"screen-reader-text\">Silicon Valley Bank crisis: Reasons and Impacts\u202f- Explained, pointwise<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[216,8184],"class_list":["post-230808","post","type-post","status-publish","format-standard","hentry","category-7-pm","category-public","tag-gs-paper-3","tag-indian-economy","entry"],"jetpack_featured_media_url":"","views":{"total":30,"cached_at":"","cached_date":1698474075},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/230808","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=230808"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/230808\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=230808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=230808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=230808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}