Rise in Deposits by Indians in Swiss Bank by 50%


swiss bank corporation

The latest data released by the Zurich-based Swiss National Bank (SNB) has revealed that the money parked by Indians in the Swiss banks has increased by 50% to Rs 7000 crores in 2017 as compared to the previous year.

The above said data has been shared after a new framework has been put into place for automatic exchange of information between Switzerland and India in November 2017 to help check the black money menace.

PM Narendra Modi had promised the citizens of the country during his election campaign in 2014 that he will get the black money back from the safe-havens abroad and put Rs 15 lakh into the account of every Indian.

It is important to highlight here, that a lot of regulatory mechanisms and legislations have been framed by the government to crack down on black money, like:

● Amendment of the Double Taxation Avoidance Agreement (DTAA), which allowed for routing of Indian money, back into Indian market through Mauritius.

● Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 under which it provided a one-time compliance window to taxpayers to make declarations of their undisclosed foreign assets through the Income Declaration Scheme (IDS) in 2016.

● Pradhan Mantri Garib Kalyan Yojana (PMGKY), which was valid from December 16, 2016 to March 31, 2017and provided an opportunity to declare unaccounted wealth and black money in a confidential manner and avoid prosecution after paying a fine of 50% on the undisclosed income. An additional 25% of the undisclosed income is invested in the scheme which can be refunded after four years, without any interest.

● Securities Exchange Board of India (SEBI) imposed restrictions on 162 listed entities in August 2017 as shell companies, as part of its broader crackdown on illegal offshore transfers and tax evasions and nearly 200,000 shell companies have been shut down.

● The IT department has put into action an aggressive plan, in end 2017, to nab evaders and is probing high-profile cases of undisclosed foreign assets. Several big corporates, businessmen and film stars are under the scanner after they were named in the list exposed by the International Consortium of Investigative Journalists in 2013.

Indian Money Parked in Swiss Banks

India was ranked highest at 37th place in the year 2004 and is presently ranked at 73rd place in terms of money parked by its citizens and companies with Swiss banks, while the UK remains on the top. Incidentally, Pakistan is placed one notch higher than India at 72nd place and China is ranked 20th.

In the era when Swiss banks strictly maintained the confidentiality clause, there was a substantial amount of Rs 44500 crore parked by Indians in the Swiss bank in the year 2006.

There was a sharp drop in the money parked by Indians in Swiss banks from Rs 14,000 crore in 2013 to Rs 4,660 crore in 2016. This dip clearly coincides with the above said crackdown by the government on black money and tax evaders.

However, as revealed by the Swiss National Bank recently, the money parked by Indians in the Swiss banks showed a 50% increase during the year 2017 to reach the level of Rs 7000 crore.

Reasons for Monumental Rise of Indian Deposits in Swiss Banks

Government’s Views

Nearly 39% increase in foreign remittances (total of Rs 77,939 crore in 2017-18) is under the RBI’s Liberalized Remittance Scheme, under which any resident Indian can remit $250,000 per year in foreign investments.

The crackdown on black money has resulted in more disclosures by the depositors in foreign banks, especially Swiss banks.

Since 2014, the Swiss Parliament has tightened the country’s money-laundering rules stating that there would be a cap of CHF 100,000 ($104,000) on cash transactions and all individuals including foreign politicians and high-profile officials will be watched more closely.

Layman’s Perspective

It is being argued that Switzerland, with its new regulatory mechanism and framework to automatically share bank information with India is no longer a safe-haven for black money.

In view of the foregoing, it brings us to an important point of debate that, why are Indian individuals and companies depositing their money in Swiss banks in that case?

● Investors are losing Faith. It can be deduced from the above that both Indian and foreign investors prefer to invest abroad. This also explains the recent plunge in the foreign investments coming into India.

● Falling Rupee against the Dollar.The rupee is at an all time low at 69 against the dollar. The profitability of businesses importing goods from abroad increases in case they had deposited money in Swiss banks earlier.

● Increasing Interest Rates in the West. The reason for businesses pulling out of India and investing abroad is that the rates of interests on deposits in the West have improved.

● Extremely High Rates of Taxation in India. The taxation system in India, especially after the hurried introduction of GST, is not only cumbersome, but is very high in comparison to the civic amenities and social security’s being provided to the tax payers.

● Stagnation in the Real Estate and Infrastructure Sector. The avenues for investment in India significantly reduced after demonetization killed the real estate sector and investors preferred to park their money abroad.

Demonetization and Voluntary Disclosure Schemes provided an Opportunity to Convert Black Money into White. The excess of legitimate wealth so generated has found its way to legitimate accounts in Swiss banks.


It may be concluded that all money stashed in Swiss banks may not be black money. However, the unprecedented increase in the deposits of Indians in Swiss bank accounts, red flags the current status of India economy and the urgent need to incentivize investments in India.

Hence, the government of the day has to take tangible steps on the ground to improve the investment climate in the country so that we do not continue to lose business.


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