Two 'Big Banks' Have Two-Third of All Swiss Money of Indians

It is just two big banks - UBS and Credit Suisse - which appear to be accounting for almost two-third of the total money held by Indians in the Swiss banking system, known for their famed secrecy walls.

According to the latest official data disclosed by Switzerland's central banking authority - Swiss National Bank (SNB), Indians' money in Swiss banks rose 43 per cent last year to 2.03 billion Swiss francs (nearly Rs 14,000 crore), despite growing global pressure on Switzerland to share client details of their banks.

A further analysis of SNB data shows that the 'big banks' account for 68.2 per cent, or about 1.4 billion Swiss francs (close to Rs 10,000 crore), of the total money belonging to the Indian clients of Swiss banks.

There are a total of 283 banks in Switzerland, out of which only two - UBS and Credit Suisse - have been classified as 'big banks' by Zurich-based SNB. There are also 93 foreign-controlled banks operating in the country.

However, the amount held by Indian clients in 'savings and deposit accounts' of Swiss banks is comparatively less at about 63 million Swiss francs (less than Rs 500 crore) and account for just about three per cent of the total exposure of Indians to the Swiss banking system.

Swiss banks classify a major portion of their clients' money as "other amounts due to customers" and such funds due to their Indian clients stand at nearly 1.6 billion Swiss francs (over Rs 11,000 crore).

The 'other' avenues through which clients park their funds with Swiss banks include "trading portfolios, financial investments and participating interests". Besides, banks are also said to be promoting 'precious metals' among their clients for parking their funds.

A small portion of clients' money is also held by Swiss banks through other banks in the foreign countries. For Indian clients, such funds stood at about 94 million Swiss francs (about Rs 650 crore) at the end of 2013.

The total Indian money held in Swiss banks includes 1.95 billion Swiss francs held directly by Indian individuals and entities, and another 77.3 million Swiss francs through 'fiduciaries' or wealth managers at the end of 2013.

The latest data from Zurich-based SNB comes at a time when Switzerland is facing growing pressure from India and many other countries to share foreign client details, while its own lawmakers are resisting such measures.

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.

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 towards the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland.

The two 'big banks' also account for close to 65 per cent, or about 857 billion Swiss francs (over Rs 60 lakh crore), of their client money from across the world at the end of 2013.

The corresponding amount for the previous year stood higher at over 900 billion Swiss francs and at more than 1 trillion Swiss francs in 2011.

With regard to Indian clients, the money owed by 'big banks' increased during 2013 from about 895 million Swiss francs at the end of 2012, while the same in the preceding year was at over 1.5 billion Swiss francs.

The quantum of Indian funds in Swiss banks stood at a record high level of 6.5 billion Swiss francs at the end of 2006, but it declined by more than 4 billion Swiss francs during four straight years of fall till 2010.

Amid allegations of Indians stashing huge illicit wealth abroad, including in Swiss banks, the Indian government has been making efforts to bring back the unaccounted money.

While a new treaty has been put in place for sharing of information on issues related to tax crimes on a prospective basis, Switzerland has also agreed to a limited retrospective clause for such information exchange in case of India. Despite stepped up pressure, Switzerland has said it cannot positively respond to requests which are beyond the ambit of bilateral tax treaty.

The Swiss government's latest response came against the backdrop of former finance minister P Chidambaram shooting off numerous letters to his Swiss counterpart raising concerns about the Alpine nation denying information on alleged unaccounted money held by Indians in banks in Switzerland.

In the letter, Mr Chidambaram had strongly objected to Switzerland's denial of information about account details of certain Indians at HSBC's Swiss bank branches, in whose cases "incriminating evidence of tax evasion" have been found.

However, Switzerland is still moving closer to do away with banking secrecy practices. Last month, it started ground work for implementation of automatic exchange of information on tax matters with various countries including India.