The Federal Deposit Insurance Corporation (FDIC) first took over the Silicon Valley Bank in California, and on Sunday took control of New York-based Signature Bank and in concert with the Federal Reserve and the Treasury Department announced that depositors in both the banks would be repaid in full. Silicon Valley Bank’s case is fairly unique. With the depositor base comprising start-ups and venture capitalists, mostly from the tech hub of Silicon Valley, the customers were geographically and sectorally concentrated. The Reserve Bank of India’s guidelines of 2018 advising banks to create an Investment Fluctuation Reserve is just the kind of countercyclical tool that has relatively insulated Indian lenders from interest rate risks. To read this editorial in Malayalam, click here.

Source: The Hindu March 16, 2023 05:34 UTC