‘Swiss banks owe Indian holders over $2 b’

The Swiss Central Bank has estimated the total liabilities of Swiss banks towards Indian account holders at about $2.5 billion in 2010 against the $1.5-trillion figure projected by some political parties and non-governmental organisations.

“The Swiss National Bank can only say that the liabilities of Swiss banks towards Indian holders according to our annual statistics... were Swiss francs 1.945 billion ($2.5 billion in 2010),” the spokesperson for the Swiss National Bank President, Mr Walter Meier, told PTI.

He said the liabilities of the Swiss banks towards Indian account holders were 1.965 billion Swiss francs ($ 2.7 billion) in 2009 and 2.4 billion Swiss francs (about $3 billion) in 2008.

In the aftermath of the financial crisis that engulfed the West after the collapse of Lehman Bank in the United States in 2008, Swiss private banks, particularly their largest bank UBS, had suffered huge losses. Subsequently, there were substantial withdrawals of funds from Swiss banks.

Several legal cases against Swiss banks, especially UBS, for parking funds illegally subscribed by wealthy US citizens through tax evasion, as well as growing international pressure from the Paris-based OECD (Organisation for Economic Cooperation and Development) and G-20 financial regulations forced the Swiss government to considerably relax confidentiality provisions for numbered accounts.

In an attempt to ward off possible censure by the G-20 leaders, the Swiss Government has gradually relaxed its banking secrecy laws that provided the extreme forms of client confidentiality until two years ago.

Following the Paris-based Organisation for Economic Cooperation and Development’s (OECD) report about a list of “uncooperative” countries such as Switzerland, Luxembourg, Austria and Liechtenstein, among others, to the G-20, there was a panic reaction.

The OECD formulated a set of strong rules and standards to curb banking secrecy laws in offshore tax havens, including the Isle of Man, Hong Kong, and Singapore, along with Switzerland, Liechtenstein Monaco, Austria and Andorra.

Unconfirmed reports suggested that several Indian companies and private holders have moved funds from Switzerland to Singapore following the financial crisis in 2008.

But the recent trends suggest that Switzerland continues to attract funds on a huge scale. The Swiss franc and its banks are now in robust health even as other industrialised countries are drowned in unprecedented fiscal crises.

“The strengthening of the Swiss frank against all major currencies over the last one year is a clear sign that funds are coming back to the Swiss banks,” said an Indian banker in Geneva, preferring anonymity.

Mr Walter Meir said the Swiss Government is holding negotiations with the governments on the proposal of having a “withholding tax” on assets held by foreign entities in Swiss banks, suggesting that he doesn’t have any information about India looking at a similar arrangement.

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