Switzerland Current Affairs

India placed 88th in money hoarded in Swiss banks

As per analysis of the latest figures compiled by the Zurich based SNB (Swiss National Bank) as on 2016-end, India has slipped to the 88th place in terms of money parked by its citizens with Swiss banks.

The analysis shows that the money officially held by Indians with banks in Switzerland now accounts for a meagre 0.04% of the total funds kept by all foreign clients in the Swiss banking system.

The latest data from the SNB comes ahead of a new framework for automatic exchange of information singned between Switzerland and India to help check the black money menace. The funds mentioned are the official figures and do not indicate the quantum of black money.

Key Facts

The total money held in Swiss banks by foreign clients from across the world, incidentally rose by a small margin to 1.42 trillion Swiss francs (CHF) during 2016 from 1.41 trillion CHF in 2015.

In terms of individual countries, United Kingdom accounted for the largest chunk at about CHF 359 (over 25%) of the total foreign money with Swiss banks. The US came second with nearly CHF 177 billion (about 14%).  Besides, UK and US, no other country accounted for a double-digit percentage share. The top-ten countries included West Indies, France, Bahamas, Germany, Guernsey, Jersey, Hong Kong and Luxembourg.

India was ranked in top-50 continuously in terms of holdings in Swiss banks between 1996 and 2007, but it started declining after that and was placed at 55th in 2008, 59th in 2009 and 2010 each, 55th again in 2011, 71st in 2012, 58th in 2013, 61st in 2014 and  75th in 2015. It was ranked highest at 37th place in 2004.

Among the five BRICS nations, India was also the lowest ranked. Russia was ranked 19th (CHF 15.6 billion), China 25th (9.6 billion), Brazil 52nd (2.7 billion) and South Africa 61st (2.2 billion). Among them only China has moved up.

Among India’s neighbouring countries, Pakistan was ranked 71st place (with about CHF 1.4 billion), Bangladesh was 89th (667.5 million), Nepal was 150th (312 million), Sri Lanka was 151st (307 million) and Bhutan was 282nd (half a million Swiss francs).

The total money belonging to the developed countries fell to CHF 824 billion, while those from developing nations actually rose marginally to CHF 208 million.  The money from developing economies in Asia-Pacific region rose to CHF 50 billion.

The funds parked in Swiss banks from offshore financial centres rose to CHF 389 billion.  The offshore financial centres that ranked higher including Cayman Islands, Panama, Marshall Islands, Cyprus, Bermuda, Seychelles, Isle of Man and Gibraltar.

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Money Parked by Indians in Swiss banks hit record low

According to the data released by Zurich-based SNB, money parked by Indians in Swiss banks have nearly halved to 676 Swiss francs (about Rs. 4,500 crore) in 2016. The data release comes ahead of a new framework for the automatic exchange of information between Switzerland and India to check the menace of black money.  SNB (Swiss National Bank) is Switzerland’s central banking authority

Salient Highlights

During 2016, the total money held by Indians fell by 45 % to stand at CHF 675.75 million. This is the biggest ever yearly decline in such funds. Out of the total funds, CHF 377 million was in the form of customer deposits, about CHF 98 million owed to Indians through other banks and CHF 190 million constitutes other ‘liabilities’. The funds reported in 2016 is the lowest amount of funds possessed by Indians in the Swiss banks ever since 1987 and marks the third straight year of decline. Apart from this year, since 1987, the earlier lowest ever figure was recorded in 1995 at CHF 723 million.

On the other hand, the funds held through fiduciaries was nearly $11 million. These funds which used to be in billions till 2007 has been falling since then due to the regulatory crackdown. Similarly, the funds held by Indians with Swiss banks was CHF 6.5 billion (Rs 23,000 crore) at 2006-end. But at present, the funds have come down to nearly one-tenth of that level. Except in 2011 and 2013, the quantum of funds held by Indians has seen a decline.

Swiss banks have said that Indians have parked their money in other global financial hubs like Singapore and Hong Kong after a global clampdown was initiated on the mighty banking secrecy practices in Switzerland.

Background

In November 2016, India and Switzerland had signed a Joint Declaration for implementation of Automatic Exchange of Information (AEOI) in respect of accounts of Indians held abroad. Under the pact, both countries will start collecting data in accordance with the global standards in 2018 and exchange it from 2019 onwards.

Switzerland agreed for the introduction of the AEOI (Automatic Exchange of information) on tax matters under the guidance of G20, OECD and other global organisations. AEOI, based on Common Reporting Standards, when implemented fully would put in place a system wherein bulk taxpayer information will be sent periodically from the source country of income to the country of residence of the taxpayer. It would enable India to get access to information virtually from almost all the countries in the world including offshore financial centres.
In June 2017, Switzerland has ratified automatic exchange of financial account information with India and 40 other countries. This will facilitate Switzerland to share information about suspected black money with India and other 40 nations.

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