Switzerland on Thursday said the quantum of money held by Indians in Swiss banks stood at 2.18 billion Swiss francs (about Rs. 12,740 crore) at the end of 2011, having risen for the first time in the past five years.
The total funds held by Indian individuals and entities include 2.025 billion Swiss francs held directly by them and 158 million held through ‘fiduciaries' or wealth managers, shows the latest data disclosed by the Swiss National Bank (SNB) in its annual handbook on Swiss banks published on Thursday.
The funds, described by the SNB as ‘liabilities' of Swiss banks towards their clients from India, are the official figures disclosed by the Swiss authorities and do not indicate the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland.
Also, the SNB's official figures do not include the money that Indians or other nationals might have in Swiss banks in the names of others. While there is no official estimate for such unaccounted funds, some estimates put it as high as $20-25 billion.
As per the SNB data, the quantum of funds held by Indians last increased in 2006 by about one billion Swiss francs to 6.5 billion Swiss francs (over Rs. 40,000 crore), but fell by more than two-thirds by the end of 2010. It rose by about Rs. 3,500 crore in 2011.
The White Paper on black money tabled in Parliament last month mentioned that the total liabilities of Swiss banks towards Indians had been coming down since 2006 and had fallen by more than Rs. 14,000 crore during 2006-2010.
The liabilities stood at Rs. 9,295 crore at the end of 2010, compared to Rs. 23,373 crore in 2006.
Amid allegations of Indians stashing away huge amounts of illicit wealth abroad, including in Swiss banks, the government says it is making various efforts to bring back the unaccounted-for money.
The White Paper said that “Switzerland has agreed to share information prospectively only and has accepted limited retrospectivity only in case of some countries such as India.”
As per the SNB data, the funds held by Indians directly in Swiss banks increased by about 370 million Swiss francs to 2.025 billion Swiss francs (Rs. 11,800 crore) in 2011.
On the other hand, the funds held through ‘fiduciaries' nearly halved to 158 million Swiss francs (about Rs. 900 crore) in 2011 — marking the fifth straight year of decline.
Fiduciaries are essentially wealth fund managers, who hold the money of Indian private holders and families in the so-called numbered accounts.
The Swiss banks' direct liabilities towards clients from India include funds held in savings and deposit accounts by individuals, financial institutions and corporates.
In terms of liabilities through fiduciary accounts, the United Kingdom tops the list with 6.1 billion Swiss francs, followed by Saudi Arabia's 5.95 billion Swiss francs, while Pakistan is also placed higher than India with 355 million Swiss francs.
On the other hand, the size of Swiss banks' assets in India increased from about two billion Swiss francs to 6.4 billion Swiss francs (over Rs. 37,000 crore) in 2011. Their assets have been continuously increasing since 2006 and have more than doubled in this period.
According to experts, there has been a “perceptible flight of funds” of Indian accountholders from Swiss banks to other places in recent years.
Foreign-capital-friendly regulations in places like Mauritius and Dubai were possibly being exploited by those seeking to move their funds away from Swiss banks, which have come under strict scrutiny of late.
At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments.
It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.
The Securities and Exchange Board of India and Reserve Bank have already stepped up their vigil over Indian entities diverting their funds.
It is feared that the money might be routed back to India, either into the stock market through FIIs or even via the FDI route.