Zurich/New Delhi: Indians' money in Swiss banks has fallen to a record low level of about Rs 9,000 crore (1.42 billion Swiss francs), as a global clampdown against the famed secrecy wall of Switzerland banking system made it unattractive for their global clients.
The total funds held by Indian individuals and entities included 1.34 billion Swiss francs held directly by Indian individuals and entities, and another 77 million Swiss francs through 'fiduciaries' or wealth managers at the end of 2012, as per the latest figures released by the Swiss National Bank (SNB) in Zurich today.
The official data, which forms part of SNB's annual report on Swiss banks, further showed that Indians' money there fell by about 35 per cent or Rs 4,900 crore in 2012.
This was much steeper than a 9.1 per cent fall in the funds held by entities from across the world in Swiss banks, which also hit an all-time low of 1.4 trillion Swiss francs (USD 1.5 trillion) at the end of 2012.
While the Swiss banks had close to Rs 14,000 crore (2.18 billion Swiss francs) of Indians' money at the beginning of 2012, the equivalent figure for entities from across the world stood at 1.5 trillion Swiss francs (USD 1.65 trillion).
The data has been released at a time when Switzerland is facing growing pressure from the US and other countries to share the foreign client details, while its own lawmakers are resisting such measures. The funds, described by SNB as 'liabilities' of Swiss banks towards their clients from India, are the official figures disclosed by the Swiss authorities and do not indicate towards the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland. SNB's official figures do not include the money that Indians or others might have in Swiss banks in the names of others.
The sharp decline in Indian money in Swiss banks during 2012 followed a significant increase in the previous year, when such funds had risen for the first time in five years. The quantum of funds held by Indians in Swiss banks stood at a record high level of 6.5 billion Swiss francs (over Rs 41,000 crore) at the end of 2006, but has declined by over five billion Swiss francs (over Rs 32,000 crore) since then.
For clients across the world, total funds in Swiss banks stood at a record high level of USD 2.6 trillion at the end of 2007, but has fallen by over USD one trillion since then.
In a White Paper on black money tabled in Parliament last year, the Indian government said that the total liabilities of Swiss banks towards Indians have been coming down since 2006 and fell by more than Rs 14,000 crore during 2006-2010 period.
Amid allegations of Indians stashing huge amounts of illicit wealth abroad, including in Swiss banks, the government has said it is making various efforts to bring back the unaccounted money.
While a new treaty has been put in place for sharing of information on issues related to tax crimes on a prospective basis, Switzerland has also agreed to a limited retrospective clause for such information exchange in case of India.
As per SNB data, funds held by Indians directly in the Swiss banks declined sharply by about 700 million Swiss francs in 2012 to 1.34 billion Swiss francs (Rs 8,500 crore) in 2012. On the other hand, the funds held through 'fiduciaries' nearly halved to 77.4 million Swiss francs (about Rs 500 crore) in 2011 -- marking the sixth straight year of decline.
Fiduciaries are essentially wealth fund managers who hold the money of Indian private holders and families in the so-called numbered accounts. The Swiss banks' direct liabilities towards clients from India include funds held in savings and deposit accounts by Indian individuals, financial institutions and corporates.
The size of Swiss banks' assets in India also fell by about two billion Swiss francs to 4.3 billion Swiss francs in 2012. Prior to this, these assets had been continuously increasing since 2006 and had more than doubled by 2011.
The experts have been saying that there has been a "perceptible flight of funds" of Indian holders from Swiss banks to other places in the recent years. At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments.
It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.
Top financial regulators Sebi and RBI have already stepped up their vigil over Indian entities routing their funds from secretly held Swiss bank accounts to India through other locations. It is feared that the money might be routed back to India, either into the stock market through FIIs or even via the FDI route.
Indians' direct exposure to Swiss banks stood at a record high level of about five billion Swiss francs in 2006, while the amount held through fiduciaries at that time was close to 1.5 billion Swiss francs.
Globally, all the foreign clients of Swiss banks had a direct exposure of over two trillion Swiss francs in 2007, while their funds held through fiduciaries were about 365 billion Swiss francs.
Next: Rupee not in shambles, govt is ready to take step to curb volatility: Chief Economic Advisor

Rupee not in shambles, govt is ready to take step to curb volatility: Chief Economic Advisor
New Delhi: Asserting that Rupee is not in 'shambles', Finance Ministry on Thursday said the government, RBI and SEBI are alert to the situation and will take actions as warranted.
"We are not short of instruments ... We have a range of instruments to call on as and when needed, we will call upon them," Chief Economic Advisor Raghuram Rajan said when asked what steps the government is contemplating to check Rupee which slid to an all time low of 59.93 to a dollar after hitting 60 on Thursday.Read full story here
The Finance Ministry, RBI and Sebi are alert to the situation, he said, adding" "All options are open to us (to stem Rupee fall). We have to be very careful in thinking through options".
The rupee hit a life time low of 59.93 to a dollar in early trade on Thursday. It later recovered ground and was trading at around 59.7 to a dollar in noon trade.
The US dollar strengthened against major currencies on comments by Federal Reserve Chairman Ben Bernanke that the US Fed may start scaling back its monetary stimulus programme later this year.
"Rupee is not in shambles. We should not be overtly pessimistic ... We do not like volatility. We will take actions when warranted," Rajan said.
He further said the Current Account Deficit (CAD) is large and the government is taking steps to taper it.
"We have a Current Account Deficit which is large, but I believe we are on our way to tapering it ... gold imports are coming off their peaks," he said.
He however, ruled out any knee-jerk reaction to curb gold imports saying such reactions would not augur well for the overall health of the economy. 
Rajan said "curbs or blanket bans are harmful because they hurt the economy. We have to take measured actions rather than knee-jerk reactions ... We are not going to take actions that impinge the medium-term prospects for India".
Rajan further said steps would be taken to liberalise and further strengthen the capital markets.
"We will be alert to developments and take actions as necessary, but we will not let it detract us from the longer term goal of putting economic recovery on firm and solid ground," he said.
Currencies of all emerging market economies are depreciating, Rajan said adding "there is nothing particularly wrong with the rupee right now ... I believe over time matters will stabilise".
He further said the CAD would be better in June than in May.
The CAD, which is the difference between the outflow and inflow of foreign currency, is estimated to be around 5 per cent of the GDP in 2012-13 fiscal. The CAD had touched a record high of 6.7 per cent in the October-December quarter.
Trade deficit widened to USD 20.1 billion in May from USD 17.8 billion a month ago. Gold and silver imports rose nearly 90 per cent to USD 8.4 billion in May. Cumulatively, in April-May the import of precious metals stood at USD 15.88 billion.
The government has hiked import duty on gold three times since 2012 including the recent hike by 2 per cent to 8 per cent to curb demand. Besides, the RBI too has put restrictions on banks on importing gold.
 
Huge gold imports have put pressure on the country's CAD, which in turn is affecting the value of rupee.