us banking crisis, US Banking Crisis: Which termite is licking the banks of America? – what is the reason behind us banking crisis, how its effect india
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why american banks are failing
Banks are collapsing one after the other in America. First, California-based Silicon Valley Bank of America went bankrupt. Then Signature Bank of New York was foreclosed and now First Republic Bank is also bankrupt. In such a situation, questions are being raised that what happened all of a sudden that big banks are getting closed one after the other in America. The economy of a powerful country is shaken. The lock is hanging on the major American banks. Not one or two but many factors are responsible for this. Record inflation, ever-increasing interest rates from Ferdl and its side effect on the balance sheet.
Rising interest rates worsened the situation
The situation in America is continuously getting worse. Rising inflation has increased the difficulties of the American. Almost all the countries of the world including America are struggling with inflation for the last one-and-a-half years. To control inflation, the US Federal started increasing interest rates. Interest rates increased so much that it became difficult to take loans. People reduced taking loans and the economy started slowing down due to less consumption. This affected the health of the banks and the financial condition of the banks kept on deteriorating.
Why did Silicon Valley Bank sink?
The biggest reason for the sinking of Silicon Valley Bank was its wrong policies. Silicon Valley made some wrong decisions. The bank gave money to startups that no other bank would touch. In the beginning everything was good. The bank started investing the money in long-term bonds, but when interest rates rose, the bonds lost their value. Similarly, Signature Bank also fell due to its wrong policies. Where one bank took quick money and invested it without calculating the risk, the other bank put its hands into unpredictable crypto assets.
Can it affect India as well?
In the global world, the world’s economy is linked to each other. If there is any upheaval in America, it will have a direct impact on the Indian market as well. In such a situation, we cannot completely deny that the American banking crisis will not affect India, but it can definitely be said that it will not affect the Indian banking system. Markets may be affected, but India’s banks are safe. That’s why you don’t need to worry. The banks that have collapsed in America have very limited business in India. Indian banks are very strict about giving loans. On the other hand, it is not easy to create such a situation in India amidst the strict guidelines of RBI.
US Bank Crisis: Banking crisis not ending, another bank sold, know what will happen to account holders
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