Indians’ Funds In Swiss Banks Jump By 50 Percent, Highest In 14 Years

Funds invested by Indian individuals and firms in Swiss banks, including through India-based branches and other financial institutions, jumped to a 14-year-high of 3.83 billion Swiss francs (over Rs 30,500 crore) in 2021 on a sharp surge in holdings via securities and similar instruments while customer deposits rose as well, annual data from Switzerland’s central bank showed on Thursday.

The rise in aggregate funds of Indian clients with Swiss banks, from 2.55 billion Swiss francs (Rs 20,700 crore) at the end of 2020, marks the second consecutive year of increase.

Besides, the money held in Indian customers’ savings or deposit accounts rose to a seven-year high of about Rs 4,800 crore, reversing a two-year declining trend.

The total amount of Swiss francs (CHF) 3,831.91 million, described by the Swiss National Bank (SNB) as ‘total liabilities’ of Swiss banks or ‘amounts due to’ their Indian clients at the end of 2021, included CHF 602.03 million in customer deposits (up from CHF 504 million at 2020-end), CHF 1,225 million held via other banks (up from CHF 383 million), and CHF 3 million through fiduciaries or trusts (up from CHF 2 million).

The highest component of CHF 2,002 million (up from CHF 1,665 million) was ‘other amounts due to customers’ in form of bonds, securities and various other financial instruments.

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 now in 2021, as per the Swiss National Bank (SNB) data.

While all four components had declined during 2019, the year 2020 saw a significant plunge in customer deposits, while there has been a surge across all categories in 2021.

These are official figures reported by banks to the 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.

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 8.3 percent during 2021 in such funds to USD 115.5 million (Rs 927 crore at current exchange rates), after rising by nearly 39 percent during 2020 to USD 125.9 million (Rs 932 crore).

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 percent in 2019, after declining by 11 percent in 2018 and by 44 percent 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 ‘black money and they actively support India in its fight against tax fraud and evasion.

The 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 to be done 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.

Overall, customer deposits across the Swiss banking spectrum, comprising 239 banks, rose in 2021 to nearly CHF 2.25 trillion. The overall funds of foreign clients, including of institutions, rose to nearly CHF 1.5 trillion (Rs 118 lakh crore).

In terms of assets (or funds due from customers), Indian clients accounted for CHF 4.68 billion at the end of 2021, up nearly 10 percent. This included dues from Indian customers worth about CHF 323 million after a rise of 25 percent during the year.

While the UK topped the charts for foreign clients’ money in Swiss banks at CHF 379 billion, it was followed by the US (CHF 168 billion) at the second spot — the only two countries with 100-billion-plus client funds.

News source: businesstoday

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