Why Indian money in Swiss banks is down despite 50% jump in ‘customer deposits’

The Swiss National Bank (SNB) published its annual banking statistics, revealing that the total funds linked to Indian clients in Swiss banks fell by over 8%...

What Happened

The Swiss National Bank (SNB) published its annual banking statistics, revealing that the total funds linked to Indian clients in Swiss banks fell by over 8% in 2025 to CHF 3.25 billion (approximately ₹36,793 crore).
Despite this overall decline, money classified under "customer deposits" — held directly in Swiss bank accounts by individual and institutional clients — rose by more than 50% during the same year.
The apparent paradox is explained by a sharper fall in funds held through "local branches and other financial institutions" category, which more than offset the rise in direct customer deposits.
The 2025 decline comes after a near-threefold increase in 2024, when Indian-linked funds had risen to approximately CHF 3.5 billion — the highest since 2021.
Authorities and analysts caution that the SNB data does not indicate the quantum of illicit or undisclosed money; the figures cover all types of clients including NRIs, institutional investors, and legitimate business entities.
Data also excludes funds Indians or entities may hold through third-country structures (shell companies in tax havens that then park money in Swiss banks).

Static Topic Bridges

Automatic Exchange of Information (AEOI) and the Common Reporting Standard (CRS)

The Common Reporting Standard (CRS) is the global framework for Automatic Exchange of Financial Account Information (AEOI), developed by the Organisation for Economic Co-operation and Development (OECD) in 2014. It requires financial institutions to report account information of non-resident clients to their domestic tax authorities, which then automatically share the data with the account-holder's home country.

India signed the CRS agreement in 2015 and became an early adopter; CRS provisions took effect in India from January 1, 2016, with the first information exchange in September 2017.
Switzerland implemented CRS from January 1, 2017, with its first exchange with partner countries (including India) in 2018.
Under AEOI, Switzerland now automatically transmits data on Indian account holders to Indian tax authorities annually — making it considerably harder to hide undisclosed wealth in Swiss banks.
The framework covers bank accounts, custodial accounts, investment funds, insurance products, and certain derivatives.

Connection to this news: The structural decline in Indian funds in Swiss banks over the past decade — down approximately 18% over ten years — is largely attributed to AEOI/CRS making Swiss secrecy untenable. The 50% rise in "customer deposits" alongside an overall fall reflects a shift in how remaining funds are classified, not a revival of hidden wealth parking.

Black Money (Undisclosed Foreign Income and Assets) Act, 2015

Enacted to specifically address undisclosed foreign assets and income held by Indian residents, the Black Money Act 2015 operates separately from the Income Tax Act and imposes stringent penalties.

The Act provides for 30% tax on undisclosed foreign income/assets, plus a 90% penalty (totalling 120% of asset value in extreme cases).
Willful evasion of tax on foreign assets is punishable with rigorous imprisonment of 3 to 10 years.
The Act confers powers under Section 131 of the Income Tax Act for investigation and survey.
A one-time compliance window was offered in 2015 for voluntary disclosure of foreign assets.

Connection to this news: The Black Money Act 2015, combined with AEOI/CRS data flows, has fundamentally altered the risk calculus for Indians holding undisclosed wealth abroad. The long-term decline in Swiss bank funds partially reflects the deterrent effect of this legislative framework.

FATF and India's Role in Global Anti-Money Laundering

The Financial Action Task Force (FATF), established in 1989 by the G7 Paris Summit, sets international standards for combating money laundering and terrorist financing. Countries are assessed on compliance and placed on a "grey list" (enhanced monitoring) or "black list" (non-cooperative jurisdiction) if deficient.

India became a full member of FATF in 2010.
FATF's grey-listing carries serious economic consequences — correspondent banking restrictions, increased transaction costs, and reputational damage.
Switzerland is a FATF member and its banking sector is subject to FATF standards; CRS implementation is a key FATF-aligned measure.
India's Enforcement Directorate (ED) and Financial Intelligence Unit (FIU-IND) are the primary agencies implementing FATF recommendations domestically.

Connection to this news: Switzerland's progressive alignment with FATF standards — including CRS adoption and enhanced due diligence — has made Swiss banks increasingly inhospitable for illicit flows, contributing to the structural decline in Indian funds parked there.

SNB Annual Banking Statistics: How to Read the Data

The Swiss National Bank publishes annual banking statistics that are frequently misread in public discourse. Understanding the categories is essential for accurate analysis.

"Liabilities due to banks": Funds Swiss banks owe to foreign banks (interbank deposits) — a wholesale, institutional category.
"Customer deposits": Funds held directly by individual and institutional non-bank clients in Swiss bank accounts.
Total Indian-linked funds: Aggregate across both categories plus other liabilities; this is the headline figure quoted in media.
A rise in "customer deposits" alongside a fall in total funds indicates a compositional shift — not necessarily more black money, but a reclassification or shift between categories.

Connection to this news: The 50% jump in "customer deposits" while total Indian-linked funds fell 8% is explained by this compositional shift — funds moved from interbank/institutional categories into direct customer accounts, while overall exposure to Indian clients declined.

Key Facts & Data

Total Indian-linked funds in Swiss banks: CHF 3.25 billion (~₹36,793 crore) at end-2025 — down over 8% year-on-year.
"Customer deposits" sub-category: rose more than 50% in 2025.
Peak Indian-linked funds in Swiss banks: CHF 6.5 billion in 2006.
2025 figure (CHF 3.25 bn) is down from CHF 3.5 billion in 2024, which itself was the highest since 2021.
Indian deposits in Swiss banks have declined approximately 18% over the last decade (2015–2025).
CRS effective date for India: January 1, 2016; first automatic data exchange: September 2017.
Black Money (Undisclosed Foreign Income and Assets) Act, 2015: 30% tax + 90% penalty on undisclosed foreign assets.
FATF established: 1989 (G7, Paris); India became full member: 2010.