Indian Money in Swiss Banks Skyrockets in 2024
A recent report shows that funds held by Indians in Swiss banks more than tripled in 2024, reaching a total of CHF 3.5 billion (approximately ₹37,600 crore). This significant increase is mainly due to higher deposits from banking institutions and other financial firms, not individual account holders.
In a noteworthy financial development, the total funds that Indian clients have parked in Swiss banks surged to CHF 3.5 billion in 2024. This data, published by the Swiss National Bank (SNB), reverses the declining trend seen in previous years. While this news often raises questions about “black money,” it’s important to note that the majority of this growth comes from legitimate, institutional transactions between banks and other financial entities.
Why in News?
The annual banking statistics report from the Swiss National Bank (SNB) has highlighted a massive jump in the total liabilities of Swiss banks towards their Indian clients. The figure rose from CHF 1.04 billion in 2023 to CHF 3.5 billion in 2024. This happens even as India and Switzerland operate under an Automatic Exchange of Information (AEOI) framework to prevent tax evasion.
Breakdown of Indian Funds in Swiss Banks (2024)
Here is a simple breakdown of the total amount for better understanding:
- Total Funds: CHF 3.54 billion (around ₹37,600 crore).
- Funds Held via Other Banks: CHF 3.02 billion. This is the largest component and saw a massive increase from CHF 427 million the previous year. It represents funds from Indian banks and financial institutions held in Switzerland.
- Customer Account Deposits: CHF 346 million (around ₹3,675 crore). This is the amount held by individual Indian customers and saw a small rise of 11%.
- Funds Held via Trusts (Fiduciaries): CHF 41 million. This is money held by Swiss fiduciaries or asset managers on behalf of Indian clients.
- Other Financial Instruments: CHF 135 million. This includes bonds, securities, and other financial products.
Trends Over Time
- The 2024 data marks a sharp reversal of the 70% drop seen in 2023.
- This is the highest amount recorded since 2021.
- The all-time peak for Indian funds in Swiss banks was in 2006 when it reached CHF 6.5 billion.
India’s Global Ranking
Among all foreign countries with money in Swiss banks, India’s rank has improved significantly:
- 2024 Rank: 48th
- 2023 Rank: 67th
The United Kingdom (UK) holds the top position with the largest amount of foreign client funds in Swiss banks.
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Key Takeaways for Aspirants
- Institutional, Not Individual: The surge is primarily driven by inter-bank transactions and deposits by financial firms, not by a sudden increase in individual wealth being stashed away.
- Not Necessarily Black Money: The data provided by the SNB is a comprehensive figure of all types of funds. Due to the information exchange agreement between India and Switzerland, these funds are reported and are not necessarily black money. The data does not include money that Indians might hold in Swiss banks in the name of entities from other countries.
- Different Data Sources: It’s important to distinguish between data from the SNB and the Bank for International Settlements (BIS). The BIS data, which tracks deposits from individual non-bank clients, showed a much smaller increase, confirming that the growth is institutional.
Additional Information: Understanding the Context
- Swiss National Bank (SNB): The SNB is the central bank of Switzerland. It is responsible for the country’s monetary policy and issuing Swiss franc banknotes. Its annual report on banking statistics is a reliable source of data on foreign assets.
- Automatic Exchange of Information (AEOI): This is a global standard for the automatic exchange of financial account information between tax authorities. India and Switzerland have had this agreement in place since 2018. Under this system, Switzerland provides Indian tax authorities with detailed financial information of Indian residents with accounts in Swiss banks on an annual basis. This transparency makes it very difficult to hide undeclared assets.
