MUMBAI: Leading Swiss banks are trying to distance themselves from some of the dodgy Indian clients who have twisted rules and could be a cause of embarrassment in future.

At least four individuals — three based in Mumbai and one in Delhi — holding the famously anonymous Swiss numbered accounts, have been advised by their respective banks to pull out their money by December 31.

In the past few weeks, they have received calls from bank relationship managers asking them to close the numbered accounts, known for their secrecy and convenience. One of them has been told to close the account by as early as October 30 while another has been asked to prove that tax has been paid on funds lying with the bank, a person aware of the telephonic conversations told ET. "They have been having these accounts for more than a decade," said the person.

Responding to ET's email query, a Bank Julius Baer & Co spokesman said the bank would not want to comment while an external spokesperson for Credit Suisse said, "As a matter of policy Credit Suisse does not comment on alleged client relationships. Credit Suisse is highly committed to the India market and to Indian clients, and we continue to see the country as a key growth market for the bank." Emails sent to UBS through the bank's website media contact form on Friday and Tuesday Tuesday remained unanswered till the time of going to press.

India and Switzerland plan to put in place an automatic information sharing arrangement that will require Swiss banks to report names of resident Indians opening accounts. The persons who were approached by the Swiss banks are under the impression that the pact between the two countries is forcing banks to end relationships with some of the account holders.

Unlike resident Indians who are beneficiaries of trusts that have accounts with Swiss banks, holders of numbered accounts are on a more shaky ground.



At least four individuals — three based in Mumbai and one in Delhi — holding the famously anonymous Swiss numbered accounts, have been advised by their respective banks to pull out their money by December 31

While trust beneficiaries are likely to argue before the tax department and court of law that their names were included without their knowledge and that they received no funds from the trust, numbered account holders are in a more vulnerable situation because such accounts are not opened under the Reserve Bank of India's liberalized remittance scheme — the only official channel that allows individual resident Indians to operate offshore bank accounts and purchase stocks and properties abroad.

In the absence of any specific direction from the Swiss government following a criminal probe or a large-scale investigation, Swiss banks can hold back details such as name, address and passport number of a customer who is no longer an account holder.

"The challenge for these customers is to move the money to some other destination without leaving a trail. Often, the preferred location in such cases is Dubai where the money is parked in the account of a new company incorporated in one of the free trade zones...there is some comfort for the bank as well as a client once an account is closed," said a senior professional specializing in offshore trusts and investments. "We are noticing a sense of discomfort among some of the banks when it comes to Indian names in numbered accounts. Even if they are NRIs, banks are not sure whether these individuals have paid tax in the foreign country where they have been residing," he said.



Even a dormant account with zero balance can prove troublesome as one of the persons who figures in the list of Indians having accounts with HSBC Geneva has realized. The tax office has raised a claim on him on the basis of the minimum balance required for a private bank account together with the interest calculated since the day the account was opened. n a few cases the department has made high-pitched claims, where the income of an offshore trust was clubbed with the income of all the beneficiaries (who are resident Indians) in arriving at the tax demand. The HSBC Geneva list which came to light five years ago, along with subsequent information on Indians linked to firms and bank accounts in British Virgin Islands, boiled over into a political issue with the BJP manifesto promising to bring back undisclosed funds of Indians from Swiss banks. The HSBC list triggered raids and tax demands, often driving the income-tax department to try out ways to persuade the alleged account holders into confession. However, most individuals in the list have so far refused to admit that they have Swiss bank accounts.