Indians’ money in Swiss banks has fallen to a record low level of about Rs 9,000 crore (1.42 billion Swiss francs), as a global clampdown against the famed secrecy wall of Switzerland banking system made it unattractive for their global clients.
The total funds held by Indian individuals and entities included 1.34 billion Swiss francs held directly by Indian individuals and entities, and another 77 million Swiss francs through ‘fiduciaries’ or wealth managers at the end of 2012, as per the latest figures released by the Swiss National Bank (SNB) in Zurich.
The official data, which forms part of SNB’s annual report on Swiss banks, further showed that Indians’ money there fell by about 35 per cent or Rs 4,900 crore in 2012.
This was much steeper than a 9.1 per cent fall in the funds held by entities from across the world in Swiss banks, which also hit an all-time low of 1.4 trillion Swiss francs (USD 1.5 trillion) at the end of 2012.
While the Swiss banks had close to Rs 14,000 crore (2.18 billion Swiss francs) of Indians’ money at the beginning of 2012, the equivalent figure for entities from across the world stood at 1.5 trillion Swiss francs (USD 1.65 trillion).
The data has been released at a time when Switzerland is facing growing pressure from the US and other countries to share the foreign client details, while its own lawmakers are resisting such measures.
The funds, described by SNB as ‘liabilities’ of Swiss banks towards their clients from India, are the official figures disclosed by the Swiss authorities and do not indicate towards the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland.
SNB’s official figures do not include the money that Indians or others might have in Swiss banks in the names of others.
The sharp decline in Indian money in Swiss banks during 2012 followed a significant increase in the previous year, when such funds had risen for the first time in five years.
The quantum of funds held by Indians in Swiss banks stood at a record high level of 6.5 billion Swiss francs (over Rs 41,000 crore) at the end of 2006, but has declined by over five billion Swiss francs (over Rs 32,000 crore) since then.
For clients across the world, total funds in Swiss banks stood at a record high level of USD 2.6 trillion at the end of 2007, but has fallen by over USD one trillion since then.
In a White Paper on black money tabled in Parliament last year, the Indian government said that the total liabilities of Swiss banks towards Indians have been coming down since 2006 and fell by more than Rs 14,000 crore during 2006-2010 period.
Amid allegations of Indians stashing huge amounts of illicit wealth abroad, including in Swiss banks, the government has said it is making various efforts to bring back the unaccounted money.
While a new treaty has been put in place for sharing of information on issues related to tax crimes on a prospective basis, Switzerland has also agreed to a limited retrospective clause for such information exchange in case of India.
As per SNB data, funds held by Indians directly in the Swiss banks declined sharply by about 700 million Swiss francs in 2012 to 1.34 billion Swiss francs (Rs 8,500 crore) in 2012.
On the other hand, the funds held through ‘fiduciaries’ nearly halved to 77.4 million Swiss francs (about Rs 500 crore) in 2011 — marking the sixth straight year of decline.
Fiduciaries are essentially wealth fund managers who hold the money of Indian private holders and families in the so-called numbered accounts.
The Swiss banks’ direct liabilities towards clients from India include funds held in savings and deposit accounts by Indian individuals, financial institutions and corporates.
The size of Swiss banks’ assets in India also fell by about two billion Swiss francs to 4.3 billion Swiss francs in 2012. Prior to this, these assets had been continuously increasing since 2006 and had more than doubled by 2011.
The experts have been saying that there has been a “perceptible flight of funds” of Indian holders from Swiss banks to other places in the recent years.
At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments.
It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.
Top financial regulators Sebi and RBI have already stepped up their vigil over Indian entities routing their funds from secretly held Swiss bank accounts to India through other locations.
It is feared that the money might be routed back to India, either into the stock market through FIIs or even via the FDI route. Indians’ direct exposure to Swiss banks stood at a record high level of about five billion Swiss francs in 2006, while the amount held through fiduciaries at that time was close to 1.5 billion Swiss francs.
Globally, all the foreign clients of Swiss banks had a direct exposure of over two trillion Swiss francs in 2007, while their funds held through fiduciaries were about 365 billion Swiss francs.
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