Hindi English Translation || Editorial || Lessons learnt: On the Silicon Valley Bank episode

Lessons learnt: On the Silicon Valley Bank episode

The Reserve Bank of India should ensure banks are protected from global contagion and mismanagement (कुप्रबंध, अव्यवस्था)

A faltering (erratic, uncertain, unreliable, unsteady, weak, precarious) bank, this time on the U.S. West Coast, sparked a déjà vu (the expression is derived from the French, meaning “already seen”; this expression can make you feel like you’ve known someone before (or) been somewhere before (or) experienced something before) moment across global markets last week as fears of a Lehman (it’s the point at which one company’s disaster/failure/collapse becomes everyone else’s problem) redux (brought back; revived, restored, reestablished, revisited) triggered (cause, give rise to, lead to, bring about, generate) sharp declines in banking stocks worldwide and saw investors make a beeline (go/move quickly towards something) for safe haven (सुरक्षित ठिकाना) assets such as gold. However, over the course of (इस दौरान) four days from Friday, regulators (नियामक) in the world’s largest economy acted with alacrity (तत्परता, शीघ्रता) to bolster (strengthen, support, make stronger, reinforce, buttress) public confidence in the banking system. The Federal Deposit Insurance Corporation (FDIC) first took over the Silicon Valley Bank (a state-chartered commercial bank headquartered in Santa Clara, California. It is a financial institution that had become the go-to bank for nearly half of all venture-backed tech startups) in California, and on Sunday took control of New York-based Signature Bank (a New York-based full-service commercial bank) and in concert (together, jointly, in collaboration, in cooperation, shoulder to shoulder, side by side, cooperatively) with the Federal Reserve and the Treasury (funds, resources, finances) Department announced that depositors in both the banks would be repaid in full. Shareholders of the two banks would, however, not be protected, regulators said. On Monday, U.S. President Joe Biden sought to reassure the nation and global markets that the U.S. was committed to maintaining a resilient (लचीला) banking system, and would move to simultaneously tighten (make stricter, make more rigorous, make more stringent, stiffen, toughen) regulations (supervision, overseeing, monitoring, inspection; control, direction, guidance) for banks to make it less likely for such failures to occur again. While the coordinated (समन्वय, संचालित) steps have, at least for now, restored a degree of calm in most markets, there are lessons that have been learnt and others that could, perhaps (शायद, संभवतः), be gleaned (obtain, get, take, draw, gather) over time.

Silicon Valley Bank’s case is fairly unique. With the depositor base (a group of people regarded as supporting an organization) comprising start-ups and venture capitalists (उद्यम पूँजीवादी), mostly from the tech hub (the central, most important, or active place) of Silicon Valley, the customers were geographically (भौगोलिक दृष्टि से) and sectorally (क्षेत्रवार) concentrated (ध्यान केंद्रित करना). The bank had also invested extensively in a portfolio of U.S. Treasuries and mortgage bonds (a type of bond secured by mortgages, such as real estate, equipment, or other real assets), which had as a result of the recent sharp interest rate increases by an inflation (मुद्रा स्फ़ीति)-battling central bank (केंद्रीय अधिकोष) accumulated (gather, collect, garner) unrealised losses that became too costly to liquidate (convert to cash, cash in, sell off, sell up) in a distress (तनाव, कठिनाई) situation. Signature, on the other hand, had exposed (show, display, exhibit, disclose, manifest) itself to highly volatile cryptocurrencies (a type of digital currency) by providing services to those investing in digital assets (digital assets are digital representations of values that are not issued or guaranteed by a central bank or public authority and do not have the legal status of currency or money. They are accepted by natural or legal persons as a means of exchange or payment or are used for investment purposes and can be transferred, stored and traded electronically). That, along with a run (A Bank Run occurs when customers start to collectively withdraw their funds from banks under the belief that the bank is at risk of becoming insolvent) on deposits, ultimately proved to be its undoing (downfall, defeat, failure/collapse). Blaming the Fed’s monetary tightening (an act of making something stricter/rigorous) as the proximate cause for the bank failures is a case of being unable to see the wood for the trees. Interest rates move in cycles and all banking is fundamentally predicated on managing the risks associated with interest rate moves as well as ensuring that the deposits banks accept to fund lending are always reasonably matched with income or holdings (shares, securities, equities, bonds) that could be used to meet withdrawals. The Reserve Bank of India’s guidelines of 2018 advising banks to create an Investment Fluctuation Reserve (a reserve created out of the profits to meet the fall/change in the market value of investments) is just the kind of countercyclical (contrary to the fluctuations in an economic cycle) tool that has relatively insulated (protect, safeguard, shield) Indian lenders from interest rate risks. Still, the RBI must remain on guard to ensure neither global contagion nor management missteps (mistake, blunder, false step) threaten any local lender (financial institution (bank) which lends money).

Courtesy: The Hindu

Important Word List With Meaning

1.mismanagement (noun)

Hindi Meaning - कुप्रबंध, अव्यवस्था
English Meaning - maladministration, misconduct, malpractice, dereliction, mishandling.

2.safe haven (noun)

Hindi Meaning - सुरक्षित ठिकाना
English Meaning - refuge, shelter, asylum, place of safety/security.

3.over the course of (phrase)

Hindi Meaning - इस दौरान
English Meaning - during.

4.regulator (noun)

Hindi Meaning - नियामक
English Meaning - an association/statutory body that supervises a particular business activity.

5.alacrity (noun)

Hindi Meaning - तत्परता, शीघ्रता
English Meaning - eagerness, readiness, promptness, willingness, swiftness.

6.resilient (adjective)

Hindi Meaning - लचीला
English Meaning - strong, sturdy, stout/well built, durable.

7.coordinated (adjective)

Hindi Meaning - समन्वय, संचालित
English Meaning - collaborative, collective, combined, joint.

8.perhaps (adverb)

Hindi Meaning - शायद, संभवतः
English Meaning - maybe, possibly.

9.venture capitalist (noun)

Hindi Meaning - उद्यम पूँजीवादी
English Meaning - a person or company that invests in a new business venture, providing capital for startup or expansion.

10.geographically (adverb)

Hindi Meaning - भौगोलिक दृष्टि से
English Meaning - in terms of the region.

11.sectorally (adverb)

Hindi Meaning - क्षेत्रवार
English Meaning - relating to a specific part of an field of activity, particularly of a country’s economy.

12.concentrate (verb)

Hindi Meaning - ध्यान केंद्रित करना
English Meaning - centralize.

13.inflation (noun)

Hindi Meaning - मुद्रा स्फ़ीति
English Meaning - simply meaning “cost of living”; increase of price level of goods & services and vice versa decrease of currency value.

14.central bank (noun)

Hindi Meaning - केंद्रीय अधिकोष
English Meaning - the banking regulator of a county’s banking system. (e.g. The Reserve Bank of India (RBI) is the central bank of India).

15.distress (noun as modifier)

Hindi Meaning - तनाव, कठिनाई
English Meaning - hardship, trouble, adversity, destitution.

16.Silicon Valley (noun)

English Meaning - Silicon Valley is the home of the largest technology corporations in the U.S. It is located in Northern California, within the southern region of San Francisco. Silicon chips were an integral component of the semiconductor industry. Silicon Valley was first given its name because of the many silicon chip creators and manufacturers there.

17.Silicon Valley Bank (SVB) (noun)

English Meaning - a state-chartered commercial bank headquartered in Santa Clara, California. It is a financial institution that had become the go-to bank for nearly half of all venture-backed tech startups.

18.episode (noun)

English Meaning - incident, event, happening, occurrence.

19.contagion (noun)

English Meaning - In economics and finance, a contagion can be explained as a situation where a shock (disturbance) in a particular economy or region spreads out and affects others by way of, say, price movements.

20.faltering (adjective)

English Meaning - erratic, uncertain, unreliable, unsteady, weak, precarious.

21.spark (verb)

English Meaning - cause, lead to , give rise to, bring about, initiate; incite, provoke, kindle, trigger, arouse.

22.déjà vu (noun)

English Meaning - the expression is derived from the French, meaning “already seen”; this expression can make you feel like you’ve known someone before (or) been somewhere before (or) experienced something before.

23.Lehman (Brothers) moment (noun)

English Meaning - it’s the point at which one company’s disaster/failure/collapse becomes everyone else’s problem.

24.redux (adjective)

English Meaning - brought back; revived, restored, reestablished, revisited.

25.trigger (verb)

English Meaning - cause, give rise to, lead to, bring about, generate.

26.make a beeline (for) (phrase)

English Meaning - go/move quickly towards something.

27.safe haven asset (noun)

English Meaning - A safe-haven asset is a financial instrument that is expected to retain, or even gain value during periods of economic downturn.

28.bolster (verb)

English Meaning - strengthen, support, make stronger, reinforce, buttress.

29.Federal Deposit Insurance Corporation (FDIC) (noun)

English Meaning - The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by U.S. Congress to maintain stability and public confidence in the nation’s financial system.

30.take over (phrasal verb)

English Meaning - take control of, take charge of, assume responsibility for.

31.Signature Bank (noun)

English Meaning - a New York-based full-service commercial bank.

32.in concert (phrase)

English Meaning - together, jointly, in collaboration, in cooperation, shoulder to shoulder, side by side, cooperatively.

33.Federal Reserve (US) (noun)

English Meaning - the central banking system of the United States (The Reserve Bank of India (RBI) is India’s central banking institution).

34.The U.S. Treasury (noun)

English Meaning - The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. Treasury’s mission highlights its role as the steward of U.S. economic and financial systems, and as an influential participant in the world economy.

35.treasury (noun)

English Meaning - funds, resources, finances.

36.sought past tense of seek (verb)

English Meaning - try, aim, attempt.

37.tighten (verb)

English Meaning - make stricter, make more rigorous, make more stringent, stiffen, toughen.

38.regulation (noun)

English Meaning - supervision, overseeing, monitoring, inspection; control, direction, guidance.

39.degree (noun)

English Meaning - extent, scale, level.

40.glean (verb)

English Meaning - obtain, get, take, draw, gather.

41.base (noun)

English Meaning - a group of people regarded as supporting an organization.

42.venture (noun)

English Meaning - business enterprise, undertaking, project, scheme, activity.

43.capitalist (noun)

English Meaning - a person with the idea of personal profit and success.

44.hub (noun)

English Meaning - the central, most important, or active place.

45.portfolio (noun)

English Meaning - a range of investments (like shares, holdings, securities, equities, bonds).

46.mortgage (noun)

English Meaning - it is usually a loan sanctioned against an immovable asset like a house or a commercial property.

47.mortgage bond (noun)

English Meaning - a type of bond secured by mortgages, such as real estate, equipment, or other real assets.

48.accumulate (verb)

English Meaning - gather, collect, garner.

49.liquidate (verb)

English Meaning - convert to cash, cash in, sell off, sell up.

50.on the other hand (phrase)

English Meaning - as an alternative, as another option.

51.expose (verb)

English Meaning - show, display, exhibit, disclose, manifest.

52.volatile (adjective)

English Meaning - unpredictable, turbulent, uncertain, inconstant.

53.cryptocurrency (noun)

English Meaning - a type of digital currency.

54.digital assets (noun)

English Meaning - digital assets are digital representations of values that are not issued or guaranteed by a central bank or public authority and do not have the legal status of currency or money. They are accepted by natural or legal persons as a means of exchange or payment or are used for investment purposes and can be transferred, stored and traded electronically.

55.(bank) run (noun)

English Meaning - A Bank Run occurs when customers start to collectively withdraw their funds from banks under the belief that the bank is at risk of becoming insolvent.

56.undoing (noun)

English Meaning - downfall, defeat, failure/collapse.

57.tightening (noun)

English Meaning - an act of making something stricter/rigorous.

58.proximate (adjective)

English Meaning - nearest, near, close, closest; immediate; nearly accurate.

59.be unable to see the wood/forest for the trees (phrase)

English Meaning - to be unable to understand the whole situation (main issue) clearly because you are too closely involved in all of the small details of it.

60.predicate on/upon (phrasal verb)

English Meaning - base, be dependent, establish, found, premise.

61.holdings (noun)

English Meaning - shares, securities, equities, bonds.

62.Investment Fluctuation Reserve (noun)

English Meaning - a reserve created out of the profits to meet the fall/change in the market value of investments.

63.countercyclical (adjective)

English Meaning - contrary to the fluctuations in an economic cycle.

64.relatively (adverb)

English Meaning - comparatively, to a certain extent, somewhat.

65.insulate (verb)

English Meaning - protect, safeguard, shield.