Indian money in Swiss banks down 80% in one year

Amid a controversy over its official data showing 50 per cent surge in Indians’ money in Swiss banks last year to CHF 1.01 billion (about Rs 7,000 crore), Switzerland’s central banking authority SNB today said these figures are for total deposits of Indian customers, including from banks and enterprises.

The Swiss National Bank (SNB) further said its figures include the “data from branches of Swiss banks in India” and therefore the locational banking statistics (LBS) compiled by the Bank for International Settlements (BIS), a global central banking body, would be more reliable.

Only one Swiss bank — Credit Suisse — has a branch in India, while two others — UBS and Zurcher Kantonal Bank — are present in the country through one representative office each, as per the RBI data updated till January 31, 2018.

Weeks after SNB’s annual publication, ‘Banks in Switzerland’, showed a rise in Indians’ money in Swiss banks in 2017 after falling for three consecutive years, Finance Minister Piyush Goyal today said the Indian deposits in Swiss banks actually fell by 34.5 per cent last year as per the data from the BIS.

Goyal told the Rajya Sabha during Question Hour that he discussed the issue with Swiss authorities, who told him in a written reply that media reports “have not taken account of the way the (SNB) figures have to be interpreted”.

The minister said that according to Swiss authorities, more reliable data source is the locational banking statistics of the BIS, which measures international banking activity from a residence perspective, focusing on the location of banking office and captures around 95 per cent of all cross-border banking activity.

The BIS data show that non-bank loans and deposits — which constitute the individual and corporate deposits and exclude inter bank transactions — have fallen by 34.5 per cent in 2017 to USD 524 million compared to USD 800 million in 2016, Goyal said and vowed to continue the crackdown on black money.

Replying to e-mailed queries in this regard, the SNB said the figures that showed an increase of 50 per cent in Indians’ money in Swiss banks “are for total deposits of Indian customers at Swiss banks (ie. total liabilities of Swiss banks towards India), including deposits from banks and enterprises”.

On whether the BIS data was more reliable, the SNB said, “That is correct. The data of Swiss National Bank include also data from branches of Swiss Banks in India”.

As per the BIS website, the ‘amount outstanding’ towards non-bank loans and deposits of Indians in Swtizerland-based banks stood at USD 94.84 million (Rs 653 crore) at the end of 2017, down nearly 44 per cent from USD 168.13 million (Rs 1,158 crore) at 2016-end.

Further, the latest BIS data shows this figure to have risen again to USD 100.88 million (Rs 695 crore) at the end of March 2018.

In its emailed reply to PTI queries, the SNB also shared details from its annual statistics about the total liabilities of ‘Banks in Switzerland’ towards clients in India at CHF 999.094 million at the end of 2017, including CHF 151.894 million as amount due to other banks, CHF 464.164 million in form of customer deposits; and CHF 383.036 million as ‘other liabilities’.

Separately, Switzerland’s Federal Department of Foreign Affairs (FDFA) issued a statement on the issue saying the SNB’s annual banking statistics are based on surveys of banks and provide for a comprehensive picture of the Swiss banking sector.

“The figures published by the SNB are regularly mentioned in the public domain as a reliable indicator of the amount of assets held with Swiss financial institutions in respect of Indian residents,” it said.

Further, the Swiss government said, “More often than not, the reports have not taken account of the way the figures have to be interpreted, which has resulted in misleading analyses” and it it is frequently assumed that any assets held by Indian residents in Switzerland are undeclared or so-called ‘black money’.

The FDFA also said the figures that show an increase of 50 per cent in Swiss banks’ total liabilities towards India, include non-deposit liabilities as well as business of Swiss branches located in India.

It also favoured the ‘locational banking statistics’ as a better measure, saying this data source “shows that the liabilities in the form of loans and deposits of Swiss-domiciled banks towards Indian non-banks decreased by 44 per cent between 2016 and 2017.”

Switzerland said it is committed to the integrity of the global financial system as a global wealth management hub and applies the international transparency standards and therefore actively supports India in its fight against tax fraud and evasion.

According to the FDFA, the Automatic Exchange of Information in Tax Matters between Switzerland and India entered into force on January 1, 2018.

The detailed financial information on all Indian residents that have an account maintained by a Swiss financial institution in 2018 will be provided for the first time to the Indian tax authorities in September 2019 and on a yearly basis thereafter.

“The information also includes accounts that would be closed during 2018. Accordingly, assets held by Indian residents in Switzerland cannot be considered as ‘black money’,” it added.