Holding by Indians in Swiss banks decline by 70%

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New Delhi/Zurich: Funds parked by Indian individuals and firms in Swiss banks, including through local branches and other financial institutions, fell sharply by 70 per cent in 2023 to a four-year low of 1.04 billion Swiss Francs (Rs 9,771 crore), annual data from Switzerland’s central bank showed on Thursday.

The decline in aggregate funds of Indian clients with Swiss banks for the second consecutive year, after hitting a 14-year-high of CHF 3.83 billion in 2021, was largely driven by a sharp plunge in funds held through bonds, securities and various other financial instruments.

Besides, the amount in customer deposit accounts and funds held through other bank branches in India also declined significantly, the data showed.

These are official figures reported by banks to the Swiss National Bank (SNB) and do not indicate the quantum of the much-debated alleged black money held by Indians in Switzerland. These figures also do not include the money that Indians, NRIs or others might have in Swiss banks in the names of third-country entities.

The total amount of CHF 1,039.8 million, described by the SNB as ‘total liabilities’ of Swiss banks or ‘amounts due to’ their Indian clients at the end of 2023, included CHF 310 million in customer deposits (down from CHF 394 million at 2022-end), CHF 427 million held via other banks (down from CHF 1,110 million), CHF 10 million (down from CHF 24 million) through fiduciaries or trusts, and CHF 302 million as ‘other amounts due to customers in form of bonds, securities and various other financial instruments (down from CHF 1,896 million).

The total amount stood at a record high of nearly 6.5 billion Swiss francs in 2006, after which it has been mostly on a downward path, except for a few years including in 2011, 2013, 2017, 2020 and 2021, as per SNB data.

While all four components had declined during 2019, the year 2020 saw a significant plunge in customer deposits, while there was a surge across all categories in 2021. During 2022, only the fiduciaries segment saw an increase.

According to the SNB, its data for ‘total liabilities’ of Swiss banks towards Indian clients takes into account all types of funds of Indian customers at Swiss banks, including deposits from individuals, banks and enterprises. This includes data for branches of Swiss banks in India, as also non-deposit liabilities.

On the other hand, the ‘locational banking statistics’ of the Bank for International Settlement (BIS), which have been described in the past by Indian and Swiss authorities as a more reliable measure for deposits by Indian individuals in Swiss banks, showed a decline of nearly 25 per cent during 2023 in such funds to USD 70.6 million (Rs 663 crore).

It had dropped by 18 per cent in 2022 and by over 8 per cent in 2021, after rising by nearly 39 per cent in 2020.

This figure takes into account deposits as well as loans of Indian non-bank clients of Swiss-domiciled banks and had shown an increase of 7 per cent in 2019, after declining by 11 per cent in 2018 and by 44 per cent in 2017.

It peaked at over USD 2.3 billion (over Rs 9,000 crore) at the end of 2007. Swiss authorities have always maintained that assets held by Indian residents in Switzerland cannot be considered as ‘black money’ and they actively support India in its fight against tax fraud and evasion.

An automatic exchange of information in tax matters between Switzerland and India has been in force since 2018. Under this framework, detailed financial information on all Indian residents having accounts with Swiss financial institutions since 2018, was provided for the first time to Indian tax authorities in September 2019 and this is being followed every year.

In addition to this, Switzerland has been actively sharing details about accounts of Indians suspected to have indulged in financial wrongdoings after the submission of prima facie evidence. Such exchange of information has taken place in hundreds of cases so far.

The overall funds of foreign clients, including institutions, declined to CHF 983 billion (over Rs 92 lakh crore) in 2023, from CHF 1.15 trillion at the end of 2022.

In terms of assets, Indian clients accounted for CHF 1.46 million at the end of 2023, marking a decline of 63 per cent from the previous year and the lowest level in over two decades. This included dues from Indian customers worth about CHF 188 million, up from CHF 164 million at the end of 2022.

While the UK topped the charts for foreign clients’ money in Swiss banks at CHF 254 billion, it was followed by the US (CHF 71 billion) at the second spot and France (CHF 64 billion) at the third place. These three were followed in the top 10 by West Indies, Germany, Hong Kong, Singapore, Luxembourg and Guernsey. India was placed at 67th place, down from 46th place at the end of 2022. Pakistan also saw a dip to CHF 286 million (from CHF 388 million), while Bangladesh witnessed a sharp plunge from CHF 55 million to CHF 18 million. Just like in India, the issue of alleged black money in Swiss banks has been a political hot potato in the two neighbouring countries as well. –PTI