investors in new ventures decreases as investment becomes more expensive, on the other hand IT companies tend to strain their stocks to meet their own needs. As interest rates increase, the number of ‘venture capitalists’ i.e. This rise in inflation and interest rates creates a cash crunch for new ventures in the IT sector. Interest rates rise by 450 basis points in a year. From 2022, the US Federal Reserve, or the central bank, started raising interest rates to control inflation. ![]() The Silicon Valley Bank authorities invested customer deposits mainly in US government bonds and securities. Silicon Valley Bank’s deposits grew 86 percent to nearly $20 trillion in 2021 as IT boosts firms’ revenue. The US IT industry and services experienced massive growth during the lockdown. Depositors of these banks are also mainly IT companies and investors in the IT sector. ![]() They provide investment in new ventures and startups in the IT sector. Silicon Valley Bank’s investment is mainly in this IT sector. California’s Silicon Valley is world-renowned for its IT industry and services. Silicon Valley Bank’s crisis came about the same way. As Lehman Brothers went bankrupt overnight, the economy went into recession. Then, as soon as there was a slight recession in the economy, when one borrower after another failed to return the loan money to the bank, one bank after another fell into crisis. At that time, they used that money to give home loans without checking the borrower’s financial status. Before the recession, the US economy was very strong. The financial crisis of 2008 is known as the ‘subprime’ crisis in America. A bank collapse triggered a major financial crisis. It should be remembered that in 2008, after the collapse of the US investment bank ‘Lehman Brothers’, the same panic engulfed the world economy. Deposits in SVC Bank are fully protected. They have to inform them by notification on social media that they have no contact with SVB of America. The authorities of SVC Bank immediately became active. But, as the name of ‘SVC’ came out on social media from the sources of ‘SVB’, fear quickly spread among the depositors of Mumbai. There is no connection between the two banks other than the similarity of their abbreviated names. After the collapse of SVB Bank, the SVC Bank of Mumbai somehow got caught in the social media. ‘Samrao Vital Cooperative Bank’ popularly known as ‘SVC Bank’ has been doing business in Mumbai for the past 116 years. Silicon Valley Bank is abbreviated as ‘SVB’. How contagious this fear of depositors is, it was understood that the wave of bank-collapses in California in far away America came and hit Mumbai on the shores of the Arabian Sea in just a few hours.
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