The collapse is expected to affect the liquidity of Indian startups as Silicon Valley Bank has been helping startups heavily. SVB has funded 19 startups in India. However, while there are those who argue that credit swiss is not a direct threat to India, its presence and implications in the derivatives market cannot be ruled out. There are reports that the Credit Suisse crisis may spread outside of Europe.
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There is reason to say that the collapse of the Swiss bank may not affect India significantly. The banking giant does not have a significant stake in India’s banking sector. More presence is in derivatives market including foreign currency. About 60 percent of the bank’s assets in the country come from loans. In this scenario RBI may closely monitor such foreign institutions including liquidity problems. This bank failure may also cause large institutional investors to shift their deposits to more quality banks.
Foreign banks have a relatively small presence in the Indian banking system. Whereas 50 percent share is in derivatives markets. Credit Suisse was also more active in the country in this field. But the top five foreign banks in India by assets are HSBC, Citibank (now acquired by Axis Bank), Standard Chartered Bank, Deutsche Bank and JP Morgan. Credit Suisse has only 0.1 percent assets in the Indian banking system.
The institution has been in financial crisis for the last two or three years. None of the bank mergers have come to fruition. Credit Suisse’s crisis began when the largest investor in the bank, the Saudi National Bank, refused further financial assistance.
