Surging Swiss Deposits: Unpacking the Rise of Indian Money in Swiss Banks and the Black Money Puzzle

The topic of Indians stashing wealth in Swiss bank accounts has long stirred public debate, evoking images of black money, tax havens, and financial secrecy. Recent data released by the Swiss National Bank (SNB) has reignited the conversation, showing a steep jump in deposits made by Indian individuals and enterprises.

According to the SNB’s annual statistics for 2023, published in June 2024, Indian funds held in Swiss banks surged to CHF 3.92 billion (₹36,000 crore) — a nearly 50% jump from CHF 2.83 billion (₹25,700 crore) in 2022. This is the highest level in over 14 years, bringing into question whether this rise reflects legitimate financial activities or points to lingering issues around undisclosed black money.

For direct access to the report, see the Swiss National Bank’s annual publication.

Breaking Down the Numbers

The SNB categorizes Indian-linked funds into four components:

1. Customer Deposits: CHF 1.04 billion

2. Other Liabilities (including fiduciaries): CHF 2.16 billion

3. Holdings via securities and bonds: CHF 0.32 billion

4. Other bank claims and assets: CHF 0.40 billion

These add up to CHF 3.92 billion (approximately ₹36,000 crore as per June 2024 exchange rates).

However, these figures do not clarify whether the funds are legal or undeclared. They also do not include assets held via shell companies or third-country entities which could significantly increase the actual quantum of money connected to Indian residents.

The Black Money Debate: Historical Context

The issue of black money — undisclosed income and assets that escape taxation — has haunted India for decades. A 2011 report by Global Financial Integrity estimated that over $462 billion was illegally transferred out of India between 1948 and 2008.

Following public outcry, India introduced the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which mandates disclosure of all foreign assets by Indian residents. Failure to do so can result in penalties of up to 120% of the tax due and imprisonment of up to 10 years.

Despite these measures, the continued rise in foreign deposits indicates that gaps in enforcement still exist.

For a deeper understanding of global illicit flows, refer to Global Financial Integrity.

Possible Reasons Behind the Surge

1. Liberalized Remittance Scheme (LRS)

Under the RBI’s LRS, Indian residents are permitted to send up to USD 250,000 per year per individual abroad for investments, travel, education, or gifts. These legitimate remittances are a likely contributor to the uptick in Swiss accounts, especially among high-net-worth individuals.

RBI’s official FAQ on LRS

2. Increased Foreign Direct Investment (FDI) Outflows

Several Indian companies are expanding globally and opening accounts in Swiss banks to facilitate international transactions. The surge in Indian overseas corporate investments could reflect in higher balances.

3. Geopolitical and Economic Stability of Switzerland

Switzerland continues to attract global wealth due to its reputation for financial stability, investor protection, and banking discretion, even post the end of its once-legendary banking secrecy in 2018.

Legal vs. Illegal: Drawing the Line

Merely having a Swiss bank account is not illegal, but failing to declare it under Indian law is a serious offense. Since 2018, India and Switzerland have been exchanging financial information under the Automatic Exchange of Information (AEOI) framework.

Highlights:

• The AEOI agreement ensures real-time, yearly data exchange on bank balances, dividends, and interest income.

• More than 34 lakh accounts of Indians have been reported by Swiss authorities to Indian counterparts since the agreement's initiation.

Read more at the OECD’s AEOI page.

Political and Legal Ramifications

The spike in Swiss deposits has led to heated debates in India’s Parliament, with opposition leaders alleging a failure of the government’s anti-black money crusade. Meanwhile, government officials argue that the deposits represent legitimate financial expansion and global integration, not tax evasion.

Still, experts remain skeptical. India’s Enforcement Directorate (ED) and Income Tax Department have reportedly increased scrutiny of overseas assets, particularly in Switzerland and other high-risk jurisdictions like Singapore and Dubai.

For more, visit India's Income Tax Department - Project Insight.

The Global Trend and India’s Position

Switzerland is not alone. Other popular jurisdictions for offshore wealth include:

• Luxembourg

• British Virgin Islands

• Isle of Man

• Singapore

Yet, the Financial Action Task Force (FATF) notes that India is one of the few developing countries actively pushing global financial transparency, ranking high in international cooperation on illicit finance.

What’s Next?

1. AI and Data Surveillance

India’s Project Insight is being augmented with AI tools to identify suspicious overseas transactions by linking bank data, tax returns, and social media activity.

2. Tighter Compliance

Banks and financial advisors will face stricter Know-Your-Customer (KYC) requirements and mandatory disclosure frameworks.

3. Public Transparency Measures

India may consider publishing beneficial ownership registries to deter shell companies and fake corporate identities.

Conclusion

The increase of Indian deposits in Swiss banks to CHF 3.92 billion may partly reflect global wealth growth and legitimate economic activities. However, given the country’s long history with black money and tax evasion, the figures warrant closer inspection.

As India tightens regulations and strengthens global cooperation through AEOI and FATF compliance, the hope remains that future surges in foreign deposits will stem from legal, transparent, and accountable channels, rather than from the shadows of secrecy and illicit finance.