The Reserve Bank of India (RBI), the nation's banking watchdog, used that model in the most recent failure of a mid-sized Yes Bank. The first two measures in the case of the failing Silicon Valley Bank have also been taken by the Federal Reserve, the country's central bank (or popularly known as SVB). Let's examine the areas where the Federal Reserve would alter the storyline.
The Federal Deposit Insurance CorpThe majority of the SVB's depositors, start-ups, will actually have access to all of their money as of March 13.
The FDIC, an independent organisation established by the US Congress, supervises receiverships of insolvent banks and financial institutions and guarantees public deposits while also taking client protection measures. Public deposits are safeguarded and insured in India by the Deposit Insurance and Credit Guarantee Corporation.
The RBI moved fast to provide the private sector with a special liquidity window of approximately Rs 60,000 crore when Yes Bank was subject to a moratorium. This was carried out to assist the bank in repaying the depositors who were taking money out of the account. In fact, soon after, a second emergency credit line for Rs 50,000 crore was established. Similar to this, the Federal Reserve has also unveiled a plan to help SVB depositors as well as fragile institutions' liquidity.
The majority of the SVB's depositors, start-ups, will actually have access to all of their money as of March 13.
Although the reasons for the failure of these two banks varied, the first two results were similar: first, the bank in question was forced to sell its holdings because of the long lines of irritated depositors waiting to withdraw their money, and second, the banking regulator took action as a result. SVB failed as a result of greater investment losses, whereas Yes Bank fell as a result of a declining loan portfolio.
SVB's bond assets, which were invested while interest rates or yields were close to zero, lost value as a result of the rapid increase in US interest rates necessary to control the historically high level of inflation. In the case of Yes Bank, a string of shocks—demonetisation, GST, RERA, huge collapse of IL&F, etc.—and tight monetary policy slowed economic development and put stress on the mid-corporate sector, making banks like Yes Bank susceptible.