Mumbai: According to State Bank of India (SBI), a crisis similar to Silicon Valley Bank (SVB) could not have happened in India because bank regulation there is considerably more cautious than in the US.
The RBI’s asset liability management controls and tools, such as the maturity mismatch report (MMR) and interest rate sensitivity monitor, are quite particular (IRSM). The research stated that in the case of SVB, straightforward MMR and IRSM monitoring might have identified the risk present in the bank’s balance sheet and prevented the consequences.
Additionally, Indian banks are required to maintain a net stable financing ratio of one year and a 100% liquidity coverage ratio for 30 days. Full liquidity coverage was not necessary for SVB because it would have provided a cushion in the event of deposit outflows. In the US, these standards are applicable to banks with a balance sheet size of above $700 billion.
India also performs better in terms of deposit insurance coverage. Even tiny financial institutions like neighbourhood banks, cooperative banks, and regional rural banks have up to 83%, 67%, and 76% of their respective deposits insured. Deposits at top banks are insured up to 50–55% in the US, compared to only 30-45% at minor banks.
