In 2023, Indian deposits in Swiss banks fell dramatically by 70%, reaching their lowest point in four years at 1.04 billion Swiss Francs (₹9,771 crore), according to data from the Swiss National Bank (SNB). This sharp decline follows a peak in 2021 and is mainly due to reduced investments in bonds, securities, and other financial instruments.
Key Drivers of the Decline
The significant reduction in funds held by Indian clients is primarily due to a substantial decrease in investments in bonds, securities, and other financial instruments. Additionally, funds held in customer deposit accounts and cash through other bank branches in India have also seen significant declines.
Breakdown of Funds
– Customer Deposits:CHF 310 million (down from CHF 394 million in 2022)
– Other Banks:CHF 427 million (down from CHF 1,110 million)
– Fiduciaries/Trusts:CHF 10 million (down from CHF 24 million)
– Other Amounts: CHF 302 million (down from CHF 1,896 million)
Historical Context
Indian deposits in Swiss banks have generally been on a downward trend since reaching a record high of nearly CHF 6.5 billion in 2006. Exceptions to this trend occurred in 2011, 2013, 2017, 2020, and 2021.
Black Money Debate
These figures do not account for the alleged ‘black money’ held by Indians in Switzerland, as they represent official numbers provided to the SNB. Additionally, the data excludes funds held by Indians under third-country entities.
International Comparisons
As of the end of 2023, India ranked 67th in terms of foreign clients’ funds in Swiss banks, down from 46th in 2022. The UK topped the list with CHF 254 billion, followed by the US (CHF 71 billion) and France (CHF 64 billion).
Bank for International Settlements Data
According to the Bank for International Settlements’ “locational banking statistics,” Indian deposits in Swiss banks saw a 25% decrease in 2023, amounting to USD 70.6 million (₹663 crore). This metric is considered more accurate by Swiss and Indian authorities.
Cooperation on Tax Evasion
Switzerland has been actively sharing information with India to combat tax evasion and financial fraud. Since 2018, an automatic exchange of tax-related information has been in place, providing detailed financial data to Indian tax authorities annually.
Global Context
Overall, the total amount of funds held by foreign clients in Swiss banks decreased to CHF 983 billion in 2023 from CHF 1.15 trillion in 2022. Indian assets accounted for CHF 1.46 million, marking a 63% decrease from the previous year and the lowest level in over two decades.
Swiss National Bank (SNB) Key Points
– Establishment:The Swiss National Bank (SNB) was established on June 16, 1907.
– Headquarters:The headquarters are located in Bern and Zurich, Switzerland.
– Current President:Thomas Jordan (as of 2023).
– Primary Role:The SNB serves as the central bank of Switzerland, responsible for monetary policy, issuing banknotes, and ensuring the stability of the Swiss financial system.
– Ownership: The SNB is a joint-stock company with shares traded on the stock market, but the majority of shares are held by Swiss cantons and cantonal banks.
Functions
– Formulating and implementing the country’s monetary policy.
– Managing currency reserves.
– Ensuring the stability of the financial system.
– Issuing Swiss Franc banknotes.
– Acting as a banker to the Swiss Confederation.
Legal Framework
The SNB operates under the Swiss National Bank Act, which defines its mandate and powers.
Financial Reporting
The SNB publishes annual reports detailing its financial position, monetary policy, and other activities.
The substantial decline in Indian funds in Swiss banks in 2023 is indicative of a broader trend of decreasing investments in bonds, securities, and other financial instruments. Despite a history of fluctuations, the recent figures highlight a significant downturn from the peak levels seen in previous years. The ongoing efforts between Switzerland and India to combat tax evasion and financial fraud underscore the importance of transparency and cooperation in international finance.
