Swiss bank allows India access to black money information. Here’s how much it can help

Recently, Switzerland authorized the global convention on automatic exchange of information on financial transactions via its banks. This means that the Indian government won’t now need to ask the Swiss authorities for information regarding the accounts that Indians hold in Swiss accounts and would now be able to access all the transactions that Indians make with Swiss banks.

However, given the delay that this decision has had, it’s possible that it wouldn’t be of much use, since in the past few years, Indian deposits in Swiss banks have gone down.

Around ten years back at the end of 2006, the money that Indians had deposited in their Swiss banks was at a record high of 6.5 billion franc (Rs 23,000 crore). However, there has been a continuous fall in this deposit since then, except for in 2011 and in 2013 when there were rises of over 12% and 42%, respectively.

At the end of 2015, it was at an all time low of 1.2 billion franc (about Rs 8,392 crore), says data from the Swiss National Bank.

This decline was probably a result of Indian government’s attempts to get back the black money Indians held in Swiss banks and now, the government has a little chance of catching the big fish.

This decline is all set to continue now that there is no privacy cover that Swiss banks can offer and given that the recent information-sharing deal that Switzerland has done with India will be effective only from September 2019, it would give more Indians a chance to shift their illegal money somewhere else.

However, it doesn’t mean that there is nothing positive about the deal. It would certainly pressurise the black money holders since Switzerland has been one of the biggest and safest safe havens.

Across the world, tax havens hold between six to seven trillion dollars worth of black money, says an estimate by economists from the Bank of Italy in 2016, out of which India’s share could roughly be Rs 25,000-30,000 crore on the basis of actual declared portfolio assets, while on the basis of India’s share in the global GDP, it could be well around Rs 8.9 to 10.5 lakh crore.

(Image source Rediff)