The impact of the Silicon Valley collapse in the US, which has sent startups around the world into a further cautionary mode, on other countries including India has been small, Luis Breur, Resident Representative, International Monetary Fund (IMF) said on March 15.

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“Based on the actions taken by the US authorities, this situation has been controlled and when we look at the impact in other countries, including India, so far, it has been very small. So it's not an issue that raises significant concerns. Nonetheless, financial sector issues are very sensitive, so things need to be monitored very closely,” he told CNBC-TV18 in an interaction on the sidelines of the CII Partnership summit in Delhi.

IMF’s Breur noted that there have been tensions between the fight against high inflation and the US and many other countries around the world. In the case of California-based SVB, the financial stability of an institution was affected but that had very unique characteristics that cannot be generalised, he said.

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He added, “there is a tension and governments have rules, regulations, they supervise banks to make sure that banks have enough capital and manage their credit, interest rate and other risks appropriately.”

Following the collapse of SVB, reports suggest the US Federal Reserve is considering tougher rules and oversight for midsize banks similar in size to the tech lender.

Breur said that following this episode, global banks will be more careful about how they manage their liquidity. They need to be more careful of the challenges coming up due to the fight against inflation as core inflation has remained persistently high globally, he said.

The IMF’s Resident Representative also expects global interest rates to continue rising for some more time.

The US government on March 12 approved actions enabling the Federal Deposit Insurance Corporation (FDIC) to complete its resolution of the Santa Clara, California-based SVB in a manner that fully protects all depositors, according to an official statement. The US has said depositors would have access to all their money starting March 13, and no losses associated with the resolution of SVB will be borne by the taxpayer.

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The government reiterated that only SVB depositors, as well as those at New York-based Signature Bank — a second lender it took over and shut down — would be made whole.

Meanwhile, a class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn't disclose the risks that future interest rate increases would have on its business.

The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the US district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.

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