Banks fintech come to aid of domestic start-ups

March 13, 2023

With the abrupt demise of Silicon Valley Bank (SVB), the biggest in more than a decade, Indian banks as well as fintechs like Razorpay have reached out to domestic startups to set up Nostro accounts overnight to remove funds from SVB and other banks in the US. A Nostro account refers to an account that a bank holds in a foreign currency in another bank.

However, the movement of funds from SVB will take time. As reported earlier, US banking regulators on Friday took over SVB to protect depositors. The Federal Deposit Insurance Corporation (FDIC) only insures bank deposits up to $250,000. Clients having deposits higher than this figure may have to wait for an insolvency process, analysts said.

“Given the recent news, we at Razorpay have created a dedicated desk to help fellow startups in urgently moving funds from their US bank (accounts) to India. Existing RazorpayX users can move their money into their Indian current account as FDI or regular forex against invoice. Others can move their money into a Nostro account and then move it into an Indian account within 48 hours,” said Shashank Kumar, co-founder and managing director, Razorpay, in a WhatsApp message to an internal group. FE has reviewed the message.

“Razorpay, with the pitch, is trying to offer flexibility like a foreign bank would to Indian startups,” one of the persons aware of developments said. “For anyone wanting to bring money to India over the long-term, and not immediately, ICICI is providing an option to open an account in GIFT City and move money there they are helping fast-track this. We are also exploring this option for a few customers,” another message on the group read.