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Gujarat International Finance Tech- City or GIFT City is emerging to be a popular destination to route deposits for Indian start-ups who are domiciled in the US and are affected by the Silicon Valley Bank collapse.
While the chips are yet to completely fall in what can be called the Lehman Brothers moment in the California tech sector – Indian or Indian American start-ups are looking for a safe space to park their funds before they can chart out their next steps.
Even as the US Secretary of Treasury, Janet Yellen, delivered a piece of positive news for SVB depositors, stating that they have access to their accounts from Monday – anxious founders are keen to withdraw their money and explore alternatives either in the States or locally in India.
A senior executive at Razorpay told businessline that since the crash of the SVB on Friday, they have already enabled around 50-odd startups to set up alternative multicurrency or US$ accounts. “The most popular option for these start-ups is GIFT City in Gujarat,” the executive. The reason for its popularity according to the executive is that the GIFT City option enables the swift transfer of funds as well as the option of opening US$ accounts with local bank branches. “Working with Indian staff, start-ups can open accounts in a single day, as Indians are available in the US at nighttime. Founders can move their funds quickly before they plan out the next steps for their funds,” the executive said.
FINANCIAL HUB
GIFT City has been conceptualised to be an international financial hub by Prime Minister Narendra Modi, who laid its foundation stones in 2008, when he was the Chief Minister of Gujarat. It aims to be the financial and IT hub for the country. Fintech platforms have partnered with Indian banks such as RBL, ICICI and Kotak to set up these US$ banks in GIFT City.
According to some estimates, Indian and Indian American startups had almost $150 million to $200 million deposited with SVB. As the US government has cleared withdrawal of funds other options to diversify funds for these startups include investing in US Treasury Bills or opening accounts with the big four American banks.
“Even as things return to normal for Indian startups, they have received the rude wakeup call regarding the need to seek alternative banking partners,” said Karun Arya, Chief Growth Officer at GetVantage.
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