The government on Saturday refuted reports Indians were allegedly holding black money in Switzerland and said it has reached out to Swiss authorities to verify details about the deposits.
Reports citing annual data from Switzerland’s central bank said deposits of Indian individuals and firms, including through India-based branches and other financial institutions, in Swiss banks, jumped 286 per cent to over ₹20,700 crore in 2020, from ₹6,625 crore at the end of 2019, on a sharp surge in holdings via securities and similar instruments, even though customer deposits fell. They said that the jump in aggregate funds of Indians with Swiss banks reverses a two-year declining trend and has taken the figure to a 13-year high.
According to the reports, these figures do not include the money that “Indians, NRIs or others might have in banks in Switzerland in names of third-country entities.”
The Union finance ministry pointed out in a statement that India and Switzerland have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC). “Both countries have also signed the Multilateral Competent Authority Agreement (MCAA) pursuant to which, the Automatic Exchange of Information (AEOI) is activated between the two countries for sharing of financial account information annually for calendar year 2018 onwards,” it added.
The finance ministry added that India and Switzerland exchanged financial information of their residents in 2019 as well as 2020. “In view of the existing legal arrangement for 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 which is out of undeclared incomes of Indian residents,” it added.
The ministry also said five factors could potentially explain the rise in deposits in Switzerland, including increased business transactions and deposits “owing to the business of Swiss bank branches located in India” and that in inter-bank transactions between the banks of the two countries. “A capital increase for a subsidiary of a Swiss company in India and increase in the liabilities connected with the outstanding derivative financial instruments,” were also among them, it said.
“The Swiss authorities have been requested to provide the relevant facts along with their view on possible reasons for increase/decrease in the light of the media reports highlighted above,” the ministry said.
After the reports came in, the Congress on Friday demanded the Centre make full disclosure of the nature of black money and names of the individuals, who have stashed it in Swiss banks. The opposition parties also asked the government to bring a white paper detailing the amount of money it has brought back to India in the last seven years.