NEW DELHI / ZURICH: Funds deposited by Indian individuals and companies in Swiss banks, including through branches and other financial institutions based in India, jumped to 2.55 billion Swiss francs (more 20,700 crore rupees) in 2020 thanks to a surge in holdings through securities and similar instruments, although customer deposits have fallen, annual data from the Swiss central bank showed on Thursday.
The increase in aggregate funds of Indian clients with Swiss banks, of 899 million Swiss francs (Rs 6,625 crore) at the end of 2019, reverses a two-year downward trend and brought this figure to the highest level in 13 years.
It hit a record high of almost 6.5 billion Swiss francs in 2006, after which it was mostly on a downward trajectory except for a few years, notably in 2011, 2013 and 2017, according to data from the National Bank. Switzerland (SNB).
The total amount of CHF 2,554.7 million (Rs 20,706 crore), described by the SNB as the “total liabilities” of Swiss banks or “amounts due” to their Indian customers at the end of 2020, included CHF 503.9 million (over Rs 4,000 crore) in customer deposits, CHF 383 million (over Rs 3,100 crore) held through other banks, CHF 2 million (Rs 16 crore) , 5) through fiduciaries or trusts and the highest component of CHF 1,664.8 million (nearly Rs 13,500 crore) as “other amounts owed to clients in the form of bonds, securities and various other financial instruments.
While funds classified as ‘customer account deposits’ actually decreased by CHF 550 million at the end of 2019 and those through fiduciaries also fell by more than half from CHF 7.4 million, the money held through other banks rose sharply from 88 million francs during this period. .
However, the biggest difference was an increase in “other amounts owed to customers” from India, which increased sixfold from 253 million francs at the end of 2019.
All four components had declined in 2019.
These are official figures reported by banks to the SNB and do not indicate the amount of the controversial so-called black currency held by Indians in Switzerland.
These figures also do not include money that Indians, NRIs or others might have in Swiss banks on behalf of entities in third countries.
According to the SNB, its data on “total liabilities” of Swiss banks to Indian customers takes into account all types of funds from Indian customers in Swiss banks, including deposits from individuals, banks and companies. This includes data from branches of Swiss banks in India, as well as liabilities other than deposits.
On the other hand, the Bank for International Settlements (BIS) ‘bank location statistics’, which have been described in the past by Indian and Swiss authorities as a more reliable measure of the deposits of Indian individuals in Swiss banks, show an increase of almost 39% in 2020 in these funds to $ 125.9 million (Rs 932 crore).
This figure takes into account deposits as well as loans from Indian non-bank customers of banks domiciled in Switzerland and had shown an increase of 7% in 2019, after a decrease of 11% in 2018 and 44% in 2017.
It peaked at over $ 2.3 billion (over Rs 9,000 crore) at the end of 2007.
The 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 tax evasion.
An automatic exchange of tax information between Switzerland and India has been in effect since 2018. Within this framework, detailed financial information on all Indian residents with accounts with Swiss financial institutions since 2018 has been provided for the first time to Indian tax authorities in September. 2019 and it’s to be followed every year.
In addition to this, Switzerland has actively shared details of accounts of Indians suspected of engaging in financial wrongdoing after prima facie evidence was presented. Such an exchange of information has taken place in hundreds of cases so far.
Globally, customer deposits at all Swiss banks increased in 2020 to almost CHF 2,000 billion, of which over CHF 600 billion were deposits from foreign clients.
While the UK tops the charts for money from foreign clients in Swiss banks with 377 billion francs, it is followed by the United States (152 billion francs) in second place – the only two countries with more than 100 billion customer funds.
The others in the top 10 were the West Indies, France, Hong Kong, Germany, Singapore, Luxembourg, the Cayman Islands and the Bahamas.
India was placed in 51st place, ahead of countries like New Zealand, Norway, Sweden, Denmark, Hungary, Mauritius, Pakistan, Bangladesh and Sri Lanka.
Among the BRICS countries, India was below China and Russia, but above South Africa and Brazil.
Others placed above India included the Netherlands, United Arab Emirates, Japan, Australia, Italy, Saudi Arabia, Israel, Ireland, Turkey, Mexico, Austria, Greece, Egypt, Canada, Qatar, Belgium, Bermuda, Kuwait, South Korea, Portugal, Jordan, Thailand, Seychelles, Argentina, Indonesia, Malaysia and Gibraltar.
Countries where Swiss banks reported decreases in amounts owed to customers included the United States and the United Kingdom, while money parked by individuals and businesses in Bangladesh also declined in 2020.
However, the amount almost doubled in the case of Pakistan to over CHF 642 million.
Much like India, the issue of alleged black money in Swiss banks has also been a political hot potato in the two neighboring countries.
According to the SNB, there were 243 banks in Switzerland at the end of 2020.