New Delhi, Jul 1: Amid a global crackdown against alleged black money in secret accounts of Swiss banks, their bankers are selling a new safe-haven idea to their rich clients from India and other countries—the high-value 1,000 franc notes to be stored in safe deposit boxes.
These boxes—kept inside the premises of Swiss banks— are also said to be being used to stash gold, diamond, paintings and art works among other valuables—apparently because of limited risk of catching the preying eyes of foreign governments having signed banking information exchange treaties with Switzerland.
According to industry sources, bankers are telling their rich clients that Switzerland's tax and information exchange treaties with India and other countries are mostly limited to funds in customers' savings, deposit and investment accounts, and do not apply to the safe deposit boxes.
As a result, the demand has soared to record high levels for the safe deposit boxes and the 1,000 Swiss franc banknotes in Switzerland, as rich of the world are rushing to get them.
As per the data available with Switzerland's central bank SNB (Swiss National Bank), the thousand-franc notes now account for 60 per cent of total value of all Swiss banknotes in circulation, up from about 50 per cent a year ago.
Replying to PTI queries, SNB confirmed that there was a significant surge in demand for thousand-franc notes and admitted that this could be due to a trend to store the money and a higher demand was being noticed from abroad for these high-value currency notes.
SNB did not reply to specific queries about demand from India and said that it did not have any data on deposit boxes.
Just one thousand-franc banknote is worth about Rs 60,000 in Indian currency, making it easier to store large amount of money in form of these notes.
The total value of thousand-franc notes currently in circulation is Rs two trillion (32.5 billion Swiss francs).
Also, Switzerland is among the few major countries to have denomination of as high as 1,000, while the highest value banknotes in the UK and the US are only 50 pounds (about Rs 4,300) and 100 dollars (Rs 5,500), respectively.
The US used to have high-value notes like USD 500, USD 1,000, USD 5,000 and USD 10,000 earlier, but these currency bills were printed for the last time in 1945 and were not even in circulation since 1969.
Amid allegations of Indians stashing huge amounts of illicit wealth abroad, including in Swiss banks, the Indian government said in a White Paper in May that it is making various efforts to bring back the unaccounted money.
As the global pressure mounts on Switzerland to give access to their banking account details, the demand is growing for thousand-franc notes as these high-value currency bills make it easier to store large amount of cash.
Besides, the secrecy measures attached with safe deposit boxes are leading to many banks running short of these boxes and are now offering them only to very rich clients.
While there are no official figures for these boxes, the commission and fees earned by banks for such facilities appear to be rising. During 2011, Swiss banks registered a decline in their overall commission earnings, as also in their commission income from core banking operations, the SNB data shows.
However, their ‘other commissions', which includes royalty and rental fees for safe deposit boxes, rose sharply.
Switzerland government's tax department did not reply to PTI queries about the soaring demand for safe deposit boxes and thousand-franc notes, as also about the possible use of safe deposit boxes to store illicit wealth.
They also did not respond to queries about the possible use of these safe deposit boxes to circumvent the tax treaties and information exchange agreements between Switzerland and other countries, including India.
