India’s small SVC Co-Operative Bank spent the weekend scrambling to reassure depositors it has no connections whatsoever to the imploding Silicon Valley Bank (SVB) of California.
In addition to some confusion over their similar names, SVC executives said “social media rumors” have been spreading that linked the two banks together and claimed SVC is also trembling on the verge of collapse.
A little-known Indian bank moved to assure depositors their money is safe after the collapse of SVB in California caused confusion and concern due to a similarity in names https://t.co/IonuE3U2iN
— Reuters (@Reuters) March 13, 2023
“There were a few queries from customers but it mostly came from social media rumors,” an SVC branch manager in Mumbai told Reuters on Monday. “We wanted to communicate before a lot of people started asking or before it became a big issue. It’s just confusion.”
Reuters found quite a bit of confusion spreading among Indian depositors:
When one Twitter user asked SVC about “rumors about bank default”, the Indian lender said “You have got the Twitter handle wrong. We are SVC Bank … one of the leading & strongest cooperative banks in India with a legacy of 116 years.”
There were no scenes of panic at two SVC branches in Mumbai suburbs that Reuters visited on Monday, with account holders carrying on usual banking activities.
One account holder showed Reuters a text message he received from SVC which asked them to not believe any rumors.
SVB was shut down by California state and federal regulators on Friday, leaving holders of its stunning 93 percent of uninsured deposits feeling very nervous, and unleashing a wave of panic among tech venture capitalists. Investors are nervously watching to learn if the “contagion” from SVB’s collapse, the biggest financial failure since the 2008 crisis, spreads to bring other institutions down.
Some Indian companies do have connections to SVB, but tiny SVC Co-Operative bank is not one of them. On Monday, an Indian gaming and sports media platform called Nazara Technologies announced that two of its subsidiaries had about $7.75 million parked in SVB when it went down. Nazara’s stock plunged seven percent after this revelation, even though the company said both subsidiaries were “well-capitalized and generating positive cash flows.”
India’s Information Technology Minister Rajeev Chandrasekhar said on Sunday he will meet with start-up companies this week to “understand the impact on them and how the government can help during the crisis.”
Mirae Asset Venture Investments CEO Ashish Dave said on Saturday he has spoken to some startup company founders, and the outlook in that sector is “very bad,” because SVB was the “default bank” for Indian investors who launched operations in the United States.
“Uncertainty is killing them,” said Dave. “Growth ones are relatively safer as they diversified.”
“The spillover effects will be very dangerous. This is very sad,” he said.
When the Biden administration announced taxpayer-funded relief for SVB – accompanied, of course, by a cloud of political jargon to keep American taxpayers from thinking they were on the hook to bail out another well-connected bank – Dave suggested Indian startup CEOs should dance the “Naatu Naatu” to celebrate.
“Naatu Naatu” is the insane show-stopping dance number from the Indian film RRR that won the Academy Award for Best Original Song on Sunday night:
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