Silicon Valley Bank’s (SVB) collapse is triggering several unintended consequences worldwide, with the latest victim being an Indian financial institution.
Mumbai-based bank SVC Co-operative Bank Ltd. (SVC Bank), formerly known as Shamrao Vithal Co-operative Bank, was forced to release a statement saying it was unrelated to the troubled SVB as several Indian citizens found striking name similarities between both financial entities.
SVC Bank stressed that its finances were in perfect health with a long-standing history spanning 116 years.
It added that it has a staff strength of 2,300 with branches across 11 Indian states, and since kickstarting operations over a century ago, it has become one of the “most recognized names in the country’s cooperative banking space.”
“SVC Bank is completely unrelated to Silicon Valley Bank (SVB) that was based in California,” read the statement. “We request our members, customers, and other stakeholders not to pay attention to baseless rumors and mischief-mongering by unscrupulous elements insinuating similarities in brand names.”
SVC Bank ended its statement with figures indicating its profitability in 2022 and a list of awards and licenses received from the Reserve Bank of India (RBI). Mischief makers spreading rumors linking the company with the troubled U.S. bank were threatened with legal action in the strongly worded letter.
“SVC Bank reserves the right to take due legal action on rumor mongers for tarnishing its brand image,” it said.
The U.S.-based SVB faced a bank run triggered by a plethora of reasons, including falling values of technology stocks and the drying up of venture capital funds that forced the bulk of the bank’s customers to withdraw their reserves. As the bank run kicked in, regulators were forced to seize its assets, making it the biggest failure since the financial crisis of 2008.
White House to the rescue for SVB
U.S. President Joe Biden announced that the government would be stepping in to salvage the situation, assuring that depositors at SVB and cash-strapped Signature Bank (NASDAQ: SBNY) will be paid in full. His statement steered clear of using the term “bailout,” an unpopular term associated with using taxpayer funds to save banks.
“Thanks to actions we’ve taken over the past few days to protect depositors from Silicon Valley and Signature Banks, Americans can have confidence that our system is safe,” said Biden. “People’s deposits will be there when they need them – at no cost to the taxpayer.”
However, the public criticized the move on the grounds that every action taken by the government still affects the average taxpayer. Both banks had several digital currency firms as part of their customer base, with their collapse spelling a wave of concern for the industry.
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