Indians’ money in Swiss banks rise by 50% to ₹ 7,000 crore, steepest surge since 2004

Money parked by Indians in Swiss banks rose over 50% to 1.01 billion Swiss francs ( ₹7,000 crore) in 2017, reversing a three-year downward trend amid India's clampdown on suspected black money.

In comparison, the total funds held by all foreign clients of Swiss banks rose about 3% to 1.46 trillion Swiss francs or about ₹100 lakh crore in 2017, according to the official annual data released today by Swiss National Bank (SNB), the central banking authority of Switzerland.

The surge in Indian money held with Swiss banks comes as a surprise given India's continuing clampdown on suspected black money stashed abroad, including in banks of Switzerland that used to be known for their famed secrecy walls for years.

The Indian money in Swiss banks had fallen by 45% in 2016, marking their biggest ever yearly plunge, to 676 million Swiss francs (about ₹4,500 crore), the lowest ever since the Switzerland began making the data public in 1987.

According to the SNB data, the total funds held by Indians directly with Swiss banks rose to 999 million Swiss francs ( ₹6,891 crore) in 2017, while the same held through fiduciaries or wealth managers increased to 16.2 million Swiss francs ( ₹ 112 crore). These figures stood at 664.8 million Swiss francs and 11 million Swiss francs at the end of 2016.

As per the latest data, the Indian money in Swiss banks included CHF 464 million ( ₹3,200 crore) in the form of customer deposits, 152 million Swiss francs ( ₹1,050 crore) through other banks and 383 million Swiss francs ( ₹2,640 crore) as 'other liabilities' such as securities at the end of 2017.

The funds under all three heads have risen sharply, as against a huge plunge across all categories in the previous year, the SNB data showed.

The funds held through fiduciaries alone used to be in billions till 2007 but began falling after that amid fears of regulatory crackdown.

The total funds held by Indians with Swiss banks stood at a record high of 6.5 billion Swiss francs ( ₹23,000 crore) at 2006-end, but came down to nearly one-tenth of that level in about a decade.

Since those record levels, this is only the third time when there has been a rise in Indians' money in Swiss banks -- in 2011 (12%), 2013 (43%) and now in 2017 by 50.2% -- the maximum increase since 56 per cent way back in 2004.

The latest data from Zurich-based SNB comes months after a new framework having been put in place for automatic exchange of information between Switzerland and India to help check the black money menace.

While Switzerland has already begun sharing foreign client details on evidence of wrongdoing provided by India and some other countries, it has agreed to further expand its cooperation on India's fight against black money with a new pact for automatic information exchange.

There were several rounds of discussions between Indian and Swiss government officials on the new framework and also for expediting the pending information requests about suspected illicit accounts of Indians in Swiss banks.

The funds, described by SNB as 'liabilities' of Swiss banks or 'amounts due to' their clients, are the official figures disclosed by the Swiss authorities and do not indicate to the quantum of the much-debated alleged black money held by Indians there.

SNB's official figures also do not include the money that Indians, NRIs or others might have in Swiss banks in the names of entities from different countries.

Amid a decline seen in Indian money over the previous three years, there was a view that Indians who had allegedly parked their illicit money in Swiss banks in the past may have shifted the funds to other locations after a global crackdown began on the mighty banking secrecy practices in Switzerland.

Swiss banks have earlier said Indians have "few deposits" in Swiss\ banks compared to other global financial hubs like Singapore and Hong Kong amid stepped-up efforts to check the black money menace.

On directions of the Supreme Court, India had constituted a Special Investigation Team (SIT) to probe cases of alleged black money of Indians, including funds stashed abroad in places like Switzerland.

A number of strategies were deployed by the government to combat the stash-funds menace, in both overseas and domestic domain, which included enactment of a new law, amendments in the Anti-Money Laundering Act and compliance windows for people to declare their hidden assets.

The Tax department had detected suspected black money running into thousands of crores of rupees post investigations on global leaks about Indians stashing funds abroad and has launched prosecution against hundreds of them, including those with accounts in the Geneva branch of HSBC.

The issue of black money has always been a matter of big debate in India and Switzerland has been long perceived as one of the safest havens for such funds.

Earlier in 2015, the money held by Indians in Swiss banks had fallen by nearly one-third to 1,217.6 million Swiss francs (over ₹8,000 crore). Prior to that, these funds fell by 10% to 1.8 billion in 2014, after a rise of 43% in 2013 to 2.03 billion Swiss Francs.

The total assets of Swiss banks in India, however, fell by about 18% in 2017 to 3.2 billion Swiss francs in second consecutive year of decline. This does not include any tangible assets like real estate and properties.