$2.5bn Indian stash in Swiss banks

The Swiss National Bank, the central bank of Switzerland, has estimated that Indian clients have deposits of about $2.5 billion in banks in the European nation in 2010. This is just a fraction of the $1.5-trillion figure that had been projected by political parties and non-governmental organizations, who have attacked the government with their anti-corruption movement over the last few months. “The Swiss National Bank can only say that liabilities of Swiss banks towards Indian holders according to our annual statistics ... were Swiss francs 1.945 billion ($2.5 billion) in 2010,” Walter Meier, spokesperson for the Swiss National Bank’s president, said. According to him, the liabilities of Swiss banks towards Indian holders were Swiss francs 1.965 billion ($2.7 billion) in 2009 and Swiss francs 2.4 billion (about $3 billion) in 2008. In the aftermath of the financial crisis that engulfed the West after the collapse of the Lehman Bank in the United States in 2008, Swiss private banks, particularly their largest bank UBS, had suffered huge losses. Subsequently, there were substantial withdrawals of funds from Swiss banks. Unconfirmed reports suggested that several Indian companies and private holders had also moved funds from Switzerland to Singapore following the financial crisis in 2008. Moreover, several legal cases were filed against Swiss banks, especially UBS, for parking funds by wealthy US citizens through tax evasion. In addition, the banks came under growing international pressure from the Paris-based Organisation for Economic Cooperation and Development (OECD) and faced tougher G-20 financial regulations. All these forced the Swiss government to considerably relax its confidentiality provisions of numbered accounts that provided the extreme forms of client confidentiality until two years ago. After the OECD reported a list of such “uncooperative” countries as Switzerland, Luxembourg, Austria and Liechtenstein, among others, to the G-20, there was a panic reaction. The OECD formulated a set of rules and standards to curb banking secrecy laws in the offshore tax havens that include the Isle of Man, Hong Kong, and Singapore along with Switzerland, Liechtenstein Monaco, Austria and Andorra. Walter Meir said the Swiss government is holding negotiations with the governments on the proposal of having a “withholding tax” on assets held by foreign entities in Swiss banks, suggesting that he doesn’t have any information about India looking at a similar arrangement.