In the wake of the Silicon Valley Bank collapse, Indian banks have opened their doors to start-ups and technology companies looking to diversify their banking relationships and funds away from the US.

“We are working on documentation with a few clients who are looking to move money from not just SVB but some of the smaller banks as well to India,” said Rajiv Anand, Deputy MD at Axis Bank, adding that the primary requirement is diversification of deposits.

With the SVB collapse coming as a rude awakening to start-ups and tech companies to not put all their eggs in one basket, private banks such as Axis Bank, ICICI Bank, Kotak Mahindra Bank, RBL Bank, IDFC First Bank and HDFC Bank and foreign banks such as DBS and HSBC have been seeing strong demand from the start-up ecosystem to open new accounts or transfer their deposits to India, industry players said.

GIFT City, a popular destination

“A lot of options came over the weekend for GIFT City which is a great way for companies to leverage a whole new financial set-up to route some of their capital sitting outside of India into other banking structures which are more conventional and India-based,” Anurakt Jain, Co-founder and CEO at revenue-based fintech funding platform Klub said.

Most Indian banks are working to make headway in this ecosystem as VC or PE-funded start-ups also provide a great opportunity for these banks to hold international treasury, he added.

As most of the impacted start-ups have subsidiaries or headquarters in the US, much of the requirement is for dollar deposits, making GIFT City a popular destination to park these funds, industry participants said.

On Tuesday, ICICI Bank said that as part of its ‘Start-up Ecosystem Banking’, it is offering digital opening of Global Foreign Currency Current Account (GFCCA) and Special Non-Resident Rupee (SNRR) accounts as well as create deposits in both US Dollar and Indian Rupee. at its GIFT City branch for overseas holding companies and subsidiaries of Indian start-ups.

“Money was blocked for many of them (start-ups) and over the last 4-5 days, they all wanted to bring it to GIFT City. We’ve been helping them do the paperwork and co-ordinate their remittances,” said a senior official at a private sector bank, adding that so far 40-50 companies have approached the bank to either open accounts or transfer money.

Emergency credit demand

In addition, Indian banks are also seeing demand for emergency credit lines or working capital for day-to-day operations, vendor payments, salary payments and client onboarding, among other requirements.

“In addition to providing deposit maintenance services in US Dollars, the possibility of providing short-term working capital assistance to the stressed start-ups to tide over the liquidity situation is prompting Indian banks to approach and attract these start-ups,” said Jyoti Prakash Gadia, MD of investment and merchant bank Resurgent India.

MoS IT Rajeev Chandrasekhar on Tuesday assured support to facilitate transfer of start-ups’ US dollar deposits to overseas or GIFT City branches of Indian banks. With the Indian Banks’ Association (IBA) also likely to meet next week to discuss support to the sector, PSU banks too are expected to become more proactive and offer solutions catered to the start-up or tech ecosystem over the coming weeks, bankers said.