It’s already been four days since the collapse of the SVB was declared officially and panic surrounded the markets. The bank was taken over by federal regulators, three days back with deposits of numerous account holders locked in. It is said that SVB was the biggest failure in the US since Washington Mutual in 2008.
Headquartered in Santa Clara, California, the bank was a darling for startups. It spread from Silicon Valley to Europe and India as well. Silicon Valley Bank is a subsidiary of Silicon valley Finances and was founded in the year 1983. Over the last 40 years, SVB grew up to be the 16th largest bank in the US with assets of over 200 billion dollars.
Joe Biden’s government acted within 72 hours of the news that spread out about the SVB collapse. As the government directed, treasury dept officials stepped in and announced that not only the insured depositors but all customers can access the funds.
When compared to the PMC collapse in India, it was a totally different case. Punjab and Maharashtra Cooperative Bank collapsed very recently and in this case, the government put on a cap on the withdrawals of the depositors. For the initial six months, the depositors could only withdraw Rs. 1,000 per month, then it gradually increased to Rs. 10,000 and then to Rs. 40,000.
As per the news reports, since the bank scam, with the panic, as many as 70 depositors had died due to financial stress.
This is the classic case of the difference between two governments handling similar bank collapses.