Indians' money in Swiss banks hit 'record low' of Rs 4,500 crore

Money parked by Indians in Switzerland's banks nearly halved to 676 Swiss francs (about Rs 4,500 crore) in 2016 to hit a record low amid a continuing clampdown on the suspected black money stashed behind their famed secrecy walls.

In comparison, the total funds held by all foreign clients of Swiss banks somewhat rose to CHF 1.42 trillion or about Rs 96 lakh crore (from CHF 1.41 trillion a year ago).

The total funds held by Indians directly with Swiss banks stood at CHF 664.8 million at the end of 2016, while the same held through fiduciaries was nearly USD 11 million, as per the latest data published today by the country's central banking authority SNB (Swiss National Bank).

The total money of Indians fell by 45 per cent during 2016 to CHF 675.75 million, marking the biggest ever yearly decline in such funds.

This included nearly CHF 377 million in form of customer deposits, about CHF 98 million owed to Indians through other banks and CHF 190 million in form of other 'liabilities'.

The figures fell sharply across all categories last year, the SNB data showed.

This is the lowest amount of funds held by Indians in the Swiss banks ever since the Alpine nation began making the data public in 1987 and marks the third straight year of decline.

The funds held through fiduciaries or wealth managers alone used to be in billions till 2007 but has been falling amid fears of regulatory crackdown.

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

The quantum of these funds has been falling since then, except for in 2011 and in 2013 when Indians' money had risen by over 12 per cent and 42 per cent, respectively.

As per the available data since 1987, the earlier lowest ever figure was recorded in 1995 at CHF 723 million.

The latest data from Zurich-based SNB comes ahead of a new framework 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 from next year.

There have been 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 in the safe havens of Switzerland.

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.

There is a view that the Indians alleged to have parked their illicit money in Swiss banks in the past may have shifted the funds to other locations after a global clampdown began on the mighty banking secrecy practices in Switzerland.

Swiss banks have also 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 has also 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 have been deployed by the government to combat the stash-funds menace, in both overseas and domestic domain, which include enactment of a new law to tackle stashing of black money abroad, amendments in the anti-money laundering Act and compliance windows for people to declare their hidden assets.

The Income Tax department had also detected over Rs 13,000 crore black money post investigations on global leaks about Indians stashing funds abroad and has launched prosecution against hundreds of entities, including those with accounts in Geneva branch of HSBC.

The taxmen had detected Rs 8,186 crore of undisclosed income against those whose names figured in the HSBC list that was obtained by India in 2011 through the French government.

Out of the total 628 cases under this list, the department got "actionable" evidence in 415 cases and assessments have been completed in 398 cases.

The Enforcement Directorate (ED) has also begun taking action, including seizure of properties, of those named in the HSBC list under a new clause in the the Foreign Exchange Management Act (FEMA).

Earlier this month, Switzerland ratified automatic exchange of financial account information with India and 40 other jurisdictions to facilitate immediate sharing of details about suspected black money even as it sought strict adherence to confidentiality and data security.

Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said on June 16 that the implementation is planned for 2018 and the first set of data should be exchanged in 2019.

The council, which is the top governing body of the European nation, will soon notify the Indian government about the exact date from which the automatic exchange would begin.

As per the draft notification approved by the council, the decision is not subject to any referendum -- which means there should be no further procedural delay in its implementation.

The issue of black money has been a matter of big debate in India and Switzerland has been long perceived as one of the safest havens for the illicit wealth allegedly stashed abroad by Indians.

Earlier in 2015, the money held by Indians in Swiss banks had fallen by nearly one-third to CHF 1,217.6 million (over Rs 8,000 crore).

At the end of 2015, the total funds held in Swiss banks by Indians directly stood at CHF 1,206.71 million (down from CHF 1,776 million a year ago), while the money held through 'fiduciaries' or wealth managers was down at CHF 10.89 million (from CHF 37.92 million at 2014-end). The total stood at CHF 1,814 million at the end of 2014.

The total "amounts due to customers' savings and deposit accounts" fell from CHF 425.8 million at 2015-end to CHF 376.97 million, while the money held through other banks declined from CHF 270.4 million to CHF 97.8 million (after more than doubling during the previous year).

The 'other liabilities' of Swiss banks towards Indian clients, which include funds held through securities etc, declined from CHF 510.4 million to CHF 190 million.

As per the SNB data, the total money held in Swiss banks by all their foreign clients from across the world however rose from CHF 1.41 trillion (USD 1.45 trillion or about Rs 98 lakh crore) to CHF 1.42 trillion (USD 1.48 trillion) in 2016.

The total assets of Swiss banks in India fell from CHF 4.8 billion in 2015 to CHF 3.9 billion in 2016. This does not include any tangible assets like real estate and properties, while the amount due to Swiss banks from their customers stood at about CHF 407 million (down from CHF 570 million in 2015).