# Finance Ministry refutes news media reports of alleged black money held by Indians in Switzerland; Information sought from Swiss Authorities
ANS: The individual and corporate money of Indians in Swiss banks has increased to 2.55 billion Swiss francs (more than 20,700 crore rupees) in 2020. This increase has not come in the form of cash deposits, but from holdings held through securities, such as bonds, and other financial products, it stated in the annual data released by Switzerland’s central bank on Thursday.
These funds are kept in Swiss banks through branches in India and other financial organisations. At the end of 2019, Swiss Banks’ gross corpus of Indian customers amounted at 89.9 crore Swiss francs (Rs 6 625 crore). In 2020 it grew up to 2.55 billion Swiss francs (Rs 20.632 crore). It has previously declined for two years in a row. Though, the latest figure in the highest in past thirteen years.
In 2006, it was a record high of around 6.5 billion Swiss francs, according to figures from the Swiss National Bank (SNB). After that, it declined except in 2011, 2013 and 2017.
According to SNB, the total liability of Swiss banks in terms of Indian customers at the end of 2020 is 255.47 million CHF (Swiss Franc). Of this, 50.9 crore Swiss francs (over Rs 4,000 crore) are in the form of customer deposits.
At the same time, only 38.3 crore Swiss francs (over Rs 3,100 crore) have been kept through other banks. 20 lakh Swiss francs (Rs 16.5 crore) while the maximum 166.48 crore Swiss francs (about Rs 13,500 crore) are held through the trust in the form of bonds, securities and other financial products.
SNB said that the funds classified as customer account deposits have actually declined as compared to 2019. At the end of the year 2019, it was 55 crore Swiss francs. The money held through the trust has also shrunk by half last year from 74 lakh Swiss francs in 2019. However, funds held through other banks have grown faster than the 88 million Swiss francs in 2019. In the year 2019, there was a shortfall in funds in all four cases.
These data have been given by the banks to the SNB and at present, there is no concrete indication about the black money stashed by Indians in Swiss banks. These figures also do not include the amount that Indians, NRIs or entities from other third countries can hold in Swiss banks.
According to SNB, its figure shows the ‘total liability of Swiss banks towards Indian customers. For this, all types of funds of Indian customers in Swiss banks have been kept in mind. This includes deposits received from individuals, banks and companies. This includes data received from branches of Swiss banks in India as ‘non-deposit liability’.
Meanwhile, Finance Ministry refutes the reports of alleged black money of Indians in Swiss Bank; asked the Swiss Authorities to provide the relevant facts along with their view on possible reasons for increase/decrease in Indian funds as cited by the news reports.
According to the Finance Ministry’s official release: Certain reports have appeared in the media on 18.06.2021 stating that funds of Indians in Swiss Banks have risen to over Rs 20,700 crore (CHF 2.55 billion) at the end of 2020 from Rs 6,625 crore (CHF 899 million) at the end of 2019, reversing a 2 year declining trend. It has also been stated that this is also the highest figure of deposits in the last 13 years.
“Media reports allude to the fact that the figures reported are official figures
reported by banks to Swiss National Bank (SNB) and do not indicate the quantum of
much debated alleged black money held by Indians in Switzerland.
Further, these statistics do not include the money that Indians, NRIs
or others might have in Swiss banks in the names of third–country entities.”
However, the customer deposits have actually fallen from the end of 2019. The funds held through fiduciaries has also more than halved from end of 2019. The biggest increase is in “Other amounts due from customers”. These are in form of bonds, securities and various other financial instruments.
It is pertinent to point out that India and Switzerland are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and both countries have also signed the Multilateral Competent Authority Agreement (MCAA) pursuant to which, the Automatic Exchange of Information (AEOI) is activated between the two countries for sharing of financial account information annually for calendar year 2018 onwards.
Exchanges of Financial Account information in respect of residents of each country have taken place between both countries in 2019 as well as 2020. In view of the existing legal arrangement for exchange of information of financial accounts (which has a significant deterrent effect on tax evasion through undisclosed assets abroad), there does not appear to be any significant possibility of the increase of deposits in the Swiss banks which is out of undeclared incomes of Indian residents.
Further, the following factors could potentially explain the increase in deposits:
- Increase in the deposits held by Indian companies in Switzerland owing to increased business transactions
- Increase in deposits owing to the business of Swiss Bank branches located in India
- Increase in Inter- bank transactions between Swiss and Indian Banks
- A capital increase for a subsidiary of a Swiss Company in India and
- Increase in the liabilities connected with the outstanding derivative financial instruments
The Swiss Authorities have been requested to provide the relevant facts along with their view on possible reasons for increase/decrease in the light of the media reports highlighted above.
