Nepal’s deposits in Swiss banks fourth largest among South Asian nations

As Nepal has banned transfer of money abroad, the money held by Swiss banks could have been transferred ‘illegally’

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Nepal’s deposits in Swiss banks fourth largest among South Asian nations

Sagar Ghimire

Kathmandu, June 19: Funds deposited by Nepali individuals and firms in Swiss banks more than doubled to 360.82 million Swiss Francs (over Rs 46.18 billion in today’s exchange rate) in 2020, making Nepal the fourth largest depositor of cash in Switzerland among South Asian countries.

Nepalis have never parked such a huge amount of money in Swiss banks in the last 25 years, shows the 2020 report of the Swiss National Bank (SNB), the Swiss central bank. Deposits of Nepalis in Swiss banks stood at 175.9 million Swiss Francs (CHF) (nearly Rs 22.51 billion) in 2019. That amount jumped 105.2 percent in 2020 to reach CHF 360.8 million. The amount parked by Nepalis is fourth largest among South Asian countries, after India (CHF 2.6 billion), Pakistan (CHF 642.3 million) and Bangladesh (CHF 562.9 million).

Since Nepal’s laws and regulations bar the citizens and companies from transferring funds abroad without the central bank’s approval, officials believe that the deposits in Swiss banks—referred by the Swiss central bank as ‘liabilities of its banks’ to Nepali clients—could have been transferred illegally. 

The data of the Swiss central bank shows that Nepalis’ deposits had fallen 29 percent in 2019 from CHF 248.79 million (Rs 32.85 billion) in 2018.

As Swiss banks maintain highest degree of secrecy of their clients, it is not clear who these Nepali individuals or firms are and how they managed to park their funds in Switzerland.

Switzerland has long been perceived as one of the most preferred safe havens for many individuals and firms from across the world to stash their funds.

Such secrecy could also make it vulnerable to abuse of the banking system to park ill-gotten money by launderers or criminals, according to experts. 

Switzerland has ranked third in Financial Secrecy Index of 133 jurisdictions in 2020 by The Tax Justice Network.

Switzerland, however, has been dismissing such concerns, claiming that it is always committed to the integrity of the global financial system and to abiding by international transparency standards.

Officials at the Nepal Rastra Bank (NRB)—the central regulatory bank of Nepal—say that they are unaware about the SNB’s recently released data.

“I cannot comment on the case that you are referring to. However, what I can say is that Nepali citizens and firms are not allowed to  send money abroad except in certain conditions like to import goods through the use of letters of credit or to repatriate dividend provided by businesses operated by foreign investors in Nepal,” said Neelam Dhungana Timsina, a deputy governor at the NRB. “We do not have capital account convertibility. So, we do not allow overseas fund transfers easily,” added NRB Deputy Governor Timsina who oversees Foreign Exchange Management Department at the central bank.

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