Even as Swiss Banks witnessed a rise in deposits from Indians to over Rs 20,700 crore, the finance ministry has refuted the reports and asked the Swiss authorities to verify the increase or decrease in these deposits. The government said both India and Switzerland are signatories to mutual sharing of financial information, and thus there is no possibility of increasing undeclared deposits.
As figures were quoted by the Swiss National Bank about the increase in deposits from India, the opposition parties had hit at the government and demanded a white paper on the issue. Bringing black money from foreign countries was the main election plank of the BJP before it came to power in 2014.
The funds of Indians in Swiss Banks have risen to over Rs 20,700 crore (CHF 2.55 billion) at the end of 2020 from Rs 6,625 crore (CHF 899 million) at the end of 2019, reversing a 2-year declining trend. It is also the highest figure of deposits in the last 13 years.
With the issue gaining traction, the finance ministry said, “Media reports allude to the fact that the figures reported are official figures reported by banks to Swiss National Bank (SNB) and do not indicate the quantum of much-debated alleged black money held by Indians in Switzerland. Further, these statistics do not include the money that Indians, NRIs, or others might have in Swiss banks in the names of third-country entities.”
The finance ministry said that the customer deposits have actually fallen from the end of 2019. The funds held through fiduciaries have also more than halved from the end of 2019. The biggest increase is in “other amounts due from customers”. These are in the form of bonds, securities, and various other financial instruments.”
The government said India and Switzerland were signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and Multilateral Competent Authority Agreement (MCAA), which activates the automatic exchange of information (AEOI) between the two countries for sharing of financial account information annually for the calendar year 2018 onwards.
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“Exchanges of Financial Account information in respect of residents of each country have taken place between both countries in 2019 as well as 2020. Because of the existing legal arrangement for the exchange of information of financial accounts (which has a significant deterrent effect on tax evasion through undisclosed assets abroad), there does not appear to be any significant possibility of the increase of deposits in the Swiss banks that is out of undeclared incomes of Indian residents,” the finance ministry said.
The government cited various factors that could have led to the increase in deposits, including increased business transactions of Indian companies in Switzerland. “Increase in deposits owing to the business of Swiss Bank branches located in India; increase in Interbank transactions between Swiss and Indian Banks; capital increase for a subsidiary of a Swiss Company in India and increase in the liabilities connected with the outstanding derivative financial instruments.”
As the matter is set to escalate, the Indian government has asked the Swiss authorities to provide the relevant facts along with their view on possible reasons for the increase and decrease in deposits.
