Assessment of Veracity: Has the Deposit Amount by Indian Nationals in Swiss Banking Institutions Declined?

In a recent press statement, the Swiss embassy clarified that the figures published by the Swiss National Bank (SNB) include non-deposit liabilities and the business of Swiss branches located in India. The embassy also stated that the 'locational banking statistics' (LBS), collected in collaboration with the Bank for International Settlements (BIS), should be used to analyze deposits of Indians in Swiss banks.

The LBS are designed to provide comprehensive and consistent quarterly data on international banking business. Going by the data on LBS, the liabilities in the form of loans and deposits of Swiss-domiciled banks towards Indian non-banks have been decreasing for a while now. Since 2009, these liabilities have decreased by more than 75% between 2014 and 2017. The liabilities peaked at USD 8885 million in 2007, just before the global financial crisis, but have since decreased significantly.

Automatic exchange of information (AEOI) in tax matters between Switzerland and India has been in effect since 1 January 2018. Switzerland has activated AEOI with 38 different countries, including India. This move is aimed at combating tax evasion and improving transparency in cross-border financial dealings.

The media reported that deposits by Indians in Swiss Banks increased by over 50% in 2017. However, the increase in deposits is based on the official annual data released by the SNB. The BIS, of which the Reserve Bank of India (RBI), SNB, and other major central banks are members, releases the LBS quarterly. According to the latest LBS data, the liabilities have decreased by 44% between 2016 and 2017.

The Swiss embassy also clarified that any assets held by Indian residents in Switzerland are not necessarily undeclared (so-called 'Black Money'). The embassy further stated that the figures published by the SNB may not accurately represent deposits of Indian residents in Swiss financial institutions. On 24 July 2018, the Swiss embassy released a press statement to this effect.

In response to a question by Congress's Anand Sharma, the government claimed that loans and deposits of Indians, other than banks, in Swiss banks decreased by 34.5% in 2017 compared to 2016. The basic organizing principle underlying the reporting requirements is the residence of the reporting banking office.

Recently, the BJP tweeted with an infographic claiming a decrease in the deposits of Indians in Swiss banks. The BIS's quarterly LBS provide data on the international positions of banks by residency, including information on claims and liabilities across countries and currencies. In India's case, the reporting country is Switzerland and the counterpart is India.

The AEOI and the decreasing liabilities towards Indian non-banks suggest a positive trend towards transparency and compliance in cross-border financial dealings between Switzerland and India. The BIS and the SNB continue to work together to provide accurate and consistent data on the international banking business, contributing to a better understanding of the global financial landscape.