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“Secure Investments: Zerodha’s Nithin Kamath Shares Insights on Risk-Free Investing in Government Bonds Following SVB Fallout”

Nitin Kamath, the billionaire founder of a business, stated on Monday that the Silicon Valley Bank (SVB collapse) problem in the US has highlighted the need of holding money in government bonds without accepting the risk.

“With the SVB collapse situation, there is a lot of conversation in the US about the need for a bank that holds money in government bonds without taking any risk,” Kamath, who oversees India’s biggest stock trading website Zerodha, posted on Twitter.

He continued by stating, “Simply a straightforward wallet where individuals may save their cash, receive fair interest, and make payments. What the RBI’s goals are for the payment banks.”

Kamath also highlighted why payments banks in India have not tasted the kind of success that was expected. “Payments banks didn’t pick up in India because users didn’t want to pay monthly fees. Furthermore, payments became highly competitive, with businesses undercutting each other. Also, the licensors saw the payments bank primarily as a stepping stone to a full bank licence,” he added.

banking crisis

Participants had to be alert because the American banking crisis continued to take the stage. Since the 2008 financial crisis, the sudden implosion of SVB fallout this month was the largest banking failure.

After the fall of the California high-tech lender on March 10 and the demise of the New York Signature Bank a few days later, regional banking stocks fell precipitously, leading many experts to believe the Fed would forsake an anticipated rise in pace. increased.

Powell earlier this month warned senators that if “pervasive” inflationary pressures continue, boosting the benchmark lending rate may be essential to reduce them. This would result in price increases that are two percentage points higher than the bank’s long-term aim.

Futures traders responded by raising prices by 50 basis points, according to CME Group.

However the financial burden made apparent by the SVB collapse failed resulted in a significant shift in expectations.

Michael Gapen, a US economist with Bank of America, stated on Friday that the Fed’s resolve to act more aggressively on March 21 and 22 had been eroded by tensions in the banking industry.

In a note to customers, he stated, “We believe recent developments have shifted the argument. “We believe the current choice is either no rate hike in March or one of 25 (basis points),”

Also Read:“Indian Banks: A Surprising Success Story in Comparison to US and European Counterparts”

 

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