The sudden tripling of Indian-linked funds in Swiss banks has raised eyebrows across financial and political circles. While authorities attribute the surge to institutional activity, civil society groups and watchdogs question whether illicit wealth is once again slipping through global loopholes.
BY PC Bureau
In 2024, the Swiss National Bank (SNB) reported that funds linked to Indian clients in Swiss banks surged more than threefold to CHF 3.5 billion (approximately ₹37,600 crore), marking the highest level since 2021. This sharp rise, following a 70% decline in 2023 to a four-year low of CHF 1.04 billion, has sparked widespread discussion about the nature of these funds, their sources, and their broader implications for India’s economy, financial transparency, and global reputation. This report provides a detailed analysis of the data, explores the reasons behind the increase, evaluates its economic and political significance, and addresses the persistent question of whether these funds represent illicit “black money.”
- Understanding the Data: Composition of Indian Funds in Swiss Banks
The SNB’s annual report, released on June 19, 2025, categorizes the CHF 3.5 billion as the “total liabilities” of Swiss banks to Indian clients, encompassing a range of financial instruments and entities. The breakdown is as follows:
- Customer Deposits: These rose by 11% to CHF 346 million (₹3,675 crore), accounting for roughly one-tenth of the total funds. This modest increase suggests that individual account holders played a limited role in the overall surge.
- Funds via Other Banks: The largest component, CHF 3.02 billion, came through interbank transactions, a significant jump from CHF 427 million in 2023. This category likely includes funds held by Indian banks, Swiss bank branches in India, or institutional clients.
- Fiduciaries or Trusts: Funds held through fiduciaries increased to CHF 41 million from CHF 10 million, indicating a growing use of trust structures.
- Other Financial Instruments: Investments in bonds, securities, and similar instruments fell to CHF 135 million from CHF 293 million, reflecting a shift away from these assets.
In contrast, the Bank for International Settlements (BIS) reported a 6% increase in Indian individual deposits in Swiss-domiciled banks, reaching USD 74.8 million (₹650 crore) in 2024. This figure, considered a more accurate measure of individual holdings, underscores that the tripling is predominantly driven by institutional and banking channels rather than personal wealth. The SNB data does not include funds held by Indians or Non-Resident Indians (NRIs) through third-country entities, nor does it quantify alleged “black money.”
Indians’ funds in Swiss banks rise to over Rs 20,000 crore; customer deposits down for second year https://t.co/CZT6Lrctl9
Rs 20,700 pic.twitter.com/GjtcUXeRlU
— Suraj G Naik (@yoursurajnaik) June 18, 2021
- Trends in Indian Funds in Swiss Banks
The 2024 figure of CHF 3.5 billion is significant but remains below the historical peak of CHF 6.5 billion in 2006. Since then, Indian funds in Swiss banks have generally trended downward, with notable spikes in 2011, 2013, 2017, 2020, 2021, and 2022. The 2023 decline to CHF 1.04 billion (₹9,771 crore) was attributed to reduced holdings in bonds, securities, and customer deposits. The 2024 rebound reflects a reversal of this trend, driven primarily by institutional flows.
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The historical decline in Indian funds since 2006 coincides with increased global scrutiny of tax havens and India’s efforts to curb illicit financial flows. The 2018 Automatic Exchange of Information (AEOI) agreement between Switzerland and India has facilitated the annual sharing of financial data on Indian residents, starting in September 2019. This transparency mechanism has reduced the attractiveness of Swiss banks for hiding undeclared wealth, suggesting that the 2024 increase is more likely tied to legitimate financial activities.
- What Drove the Tripling in 2024?
Several factors likely contributed to the dramatic increase in Indian funds in Swiss banks:
- Institutional and Interbank Activity: The sevenfold rise in funds held through other banks (from CHF 427 million to CHF 3.02 billion) points to significant institutional activity. This could include:
- Swiss Bank Branches in India: Funds held by Swiss bank branches operating in India, such as UBS or Credit Suisse (now part of UBS), may have increased due to corporate transactions or capital flows.
- Indian Banks’ Global Operations: Indian banks with international operations may use Swiss accounts for trade financing, foreign exchange management, or cross-border investments.
- Corporate Investments: Indian companies expanding globally may park funds in Switzerland for mergers, acquisitions, or investments in European markets.
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- Global Financial Dynamics: Switzerland remains a global financial hub due to its stable banking system, strong currency, and favorable tax environment. Indian entities may have increased their use of Swiss banks amid global economic uncertainties, such as inflationary pressures or geopolitical tensions, to safeguard assets or facilitate international trade.
- Wealth Management Trends: High-net-worth individuals (HNWIs) and NRIs may be using Swiss banks for legitimate wealth management, including trusts and fiduciaries, which saw a fourfold increase. Switzerland’s expertise in private banking makes it attractive for legal asset management, especially for India’s growing affluent class.
- Rebound from 2023 Lows: The 70% decline in 2023 may have been an anomaly driven by global market corrections or repatriation of funds to India. The 2024 surge could reflect a normalization of financial flows or renewed confidence in Swiss banks as a safe haven.
- The Black Money Narrative: Myth or Reality?
The tripling of Indian funds in Swiss banks has reignited debates about “black money,” a politically charged issue in India. However, several points challenge the assumption that these funds are illicit:
- Swiss Authorities’ Clarification: Swiss officials have consistently stated that funds held by Indian residents should not be automatically labeled as black money. The AEOI agreement ensures that Indian tax authorities receive detailed financial information annually, reducing the scope for tax evasion. Switzerland has also shared data in hundreds of cases involving suspected financial wrongdoing, provided India submits prima facie evidence.
- Limited Individual Deposits: The BIS data, which focuses on individual deposits, shows a modest 6% increase to USD 74.8 million, a fraction of the USD 2.3 billion peak in 2007. This suggests that individual tax evasion is not the primary driver of the 2024 surge.
- Historical Precedents: High-profile cases, such as that of Hasan Ali Khan, who was alleged to have stashed USD 8 billion in a UBS account, have often been overstated or unresolved due to insufficient evidence. For instance, in 2016, the Income Tax Appellate Tribunal reduced Khan’s tax liability from ₹71,848 crore to ₹3 crore, highlighting the challenges in proving illicit wealth.
- Legitimate Uses: The majority of the funds (CHF 3.02 billion) are held through banking channels, likely reflecting legitimate activities such as corporate treasury management, trade financing, or investments by Indian firms with global operations.
However, the perception of Swiss banks as a haven for black money persists due to historical opacity and India’s ongoing struggle with tax evasion. A 2009 claim by the Swiss Private Bankers Association suggested that nearly USD 1 trillion of Swiss bank funds could be black money, with a significant portion attributed to Indian
