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As the probe into suspected unaccounted money stashed abroad by Indians gathers steam, banks in Switzerland are trying to safeguard their interests, while some are also considering financial provisions in their books for possible penal actions and legal costs.
Banks are also lobbying with the Swiss government to insist on putting in place measures in their information-exchange and administrative assistance frameworks with India for safeguarding the interest of banking institutions during prosecution and other legal or regulatory proceedings in black money cases.
Sources, however, said the role of some banks, as also that of certain bankers, has already come under the scanner for acting in concert with suspected black money hoarders and also for making “safe haven” promises for their funds.
The suspected lapses on the part of at least three large European banks, including two from Switzerland and the third having a significant presence in the Alpine nation, are also being probed for allegedly facilitating re-routing of funds of certain Indian corporate houses back into their listed companies as foreign investments.
Capital market watchdog Securities and Exchange Board of India is probing at least three large global banks and many Indian companies for alleged round-tripping of funds by way of multi-layered transactions, while the regulatory noose has further tightened in these cases with involvement of other regulatory and enforcement agencies.
Such transactions are suspected to have taken place in case of 15-20 Indian companies, a senior official said, refusing to disclose their names as also that of the banks saying it might impede the investigations.
So far, the focus of this Supreme Court-monitored probe has mainly remained on persons and entities from India suspected to have stashed illicit wealth in overseas locations.
Some banks are said to be advising their clients to use various “layering” methods, including by way of share market and export-import routes, to move funds from Switzerland to other locations, including India.
