Indians deposited 50% more funds in Swiss banks last year

• The total amount of deposits by Indians rose 50% to a little over 1 billion Swiss francs (₹70 billion), according to data from the Swiss National Bank.
  
• Last year marked the first time since 2013 that the funds belonging to Indians in Swiss bank accounts actually increased.
  
• Indian assets in Swiss banks reached an all-time high of 6.46 billion Swiss francs in 2006, but have steadily declined following the imposition of strict controls on tax avoidance and bank secrecy by Swiss authorities.

For the more genteel among us, the country of Switzerland is synonymous with chocolate, cheese, political neutrality and Roger Federer. For the more financially astute, it is synonymous with tax dodging.

While Swiss banking authorities have made efforts to clean up the sector and make it more compliant, the country is still an attractive location for the world’s wealthy in search of a safe place to park their assets.

In fact, 2017 marked the first time since 2013 that the funds belonging to Indians in Swiss bank accounts actually increased. The total amount of deposits by Indians rose 50% to a little over 1 billion Swiss francs (₹70 billion), according to data from the Swiss National Bank, the country’s central bank.

The increase signifies the impact of the Reserve Bank of India’s Liberalised Remittance Scheme, under which the limits on remittances from overseas have eased, as well as the gains domestic investors made in India’s stock markets last year. In comparison, the total amount of foreign-owned assets in Swiss banks inched 3% higher to 1.46 trillion Swiss francs in 2017.

A clampdown on secrecy

Indian assets in Swiss banks reached an all-time high of 6.46 billion Swiss francs in 2006, but have steadily declined following the imposition of strict controls on tax avoidance and bank secrecy by Swiss authorities. Hence, wealthy Indians have shifted funds to other tax havens like Mauritius and Singapore as a result.

At home, the Modi administration has made the crackdown on black money and repatriation of funds stashed abroad a top priority, which has also resulted in the decline in Indian deposits in Swiss banks in the last few years.

Famously, this was the stated aim of the government’s “demonetisation” initiative in November 2016. In 2015, the government also implemented the Undisclosed Foreign Income and Assets Act, allowing individuals a one-time offer to disclose the value of their assets held abroad. This resulted in the declaration of ₹41 billion worth of assets.

In December 2017, Switzerland and India agreed to start sharing tax-related information with each other. This relates to all accounts held by Indians and financial transactions conducted from January 1st, 2018 onwards. The information will likely be made available to Indian authorities on an automatic basis starting in the middle of 2019.