A customer hands Indian currency notes.REUTERS

The amount of money deposited in Swiss banks by Indians fell by 6 percent to 955 million Swiss francs (about Rs 6,757 crore) in 2018, which is the second lowest level in over two decades.

Overall, foreign funds parked in Swiss banks fell by 4 percent last year to 1.4 trillion Swiss francs (nearly Rs 99 lakh crore), the annual report prepared by Zurich-based Swiss National Bank said.

Interestingly, in 2017, the money deposits by Indians in Swiss banks had risen to 1.01 billion Swiss francs (Rs 7,000 crore), reversing a three-year downward trend. However, in 2018, the deposits fell drastically to 955 million Swiss francs, the second lowest since 1995, when it was 723 million Swiss francs. 

Tougher anti-money laundering laws responsible for fall in Indian deposits?

As per SNB data, the funds held by Indian customers in Swiss banks have fallen many times in the last five years, and the lowest recorded fall was in 2016 when it dropped by 45 percent. The official figures disclosed by the Swiss banks in terms of fund deposits, however do not include the black money as well as the deposits of Non-resident Indians or Indian nationals held through foreign entities.

But experts say that the enactment of tougher laws to check money laundering and other financial wrongdoing by Indians had an impact on the fund deposits in the Swiss banks. 

Mehul Choksi and Nirav Modi
Mehul Choksi and Nirav Modi (right) are involved in the Rs 13,400 crore Punjab National Bank scam.

In fact, the BIS data revealed that the funds held by Indians in Swiss banks came down by 11 percent to $84.6 million at the end of 2018. The figures said that although the fund deposits saw a marginal increase in the first half of 2018, they witnessed a continuous fall in the last three quarters.

The fund deposits by Indians touched an all-time high of CHF6.5 billion( Rs 23,000 crore) in 2006 over the last decade and fell by nearly one-tenth in over a decade. 

The process of swift information exchange between Indian and Swiss government, which also involved sharing the details of Indian depositors as well as their accounts, will also reportedly play a huge role in curbing the menace of black money. In 2019, the Swiss government, for the very first time, would share information on financial transactions with Indian tax officials.

The amendments in India's money laundering laws, as well as setting up compliance windows for those with hidden assets, has also helped control the menace of hidden funds. The Indian government has also started criminal proceedings against those involved in stashing funds worth thousands of crores of rupees in foreign banks.