Mumbai: Swiss Bankers Association (SBA) chairman Pierre G. Mirabaud has put the onus of the delay in unravelling an intricate multinational trail of money transfers between an Indian horse owner and a fugitive Saudi arms dealer on Indian authorities, saying the government here did not respond to a request from Swiss authorities for certain clarifications.
“We have a very clear mechanism of mutual assistance and any government that makes a request using proper procedures will get a quick response from the Swiss government,” Mirabaud said.
The Swiss government, according to him, will always obtain from any bank the relevant information when a foreign government requests it. “There is no banking secrecy; there is no protection,” Mirabaud added.
He was also emphatic that it was very important that when a country makes a request to the Swiss government, it should be ready to give any clarification that the authorities may seek.
In the case of UBS AG, “there was a request from the Swiss government to Indian authorities, for which, I understand, there was no answer from the Indian government as of now,” Mirabaud said.
On 6 February, Mint reported that the delay in the resolution of the money transfer issue and the Swiss bank’s non-cooperation with the Indian authorities had prompted the Reserve Bank of India (RBI) to recall a licence issued last year to UBSto open its first branch inMumbai. The non-cooperation had also cost UBS its deal to buy the Indian mutual fund business of Standard Chartered Bank for $118.2 million (Rs467 crore).
Mirabaud, however, does not see any connection between the two events, saying it was speculation and, “...we do not comment on speculation.” When asked what he thought were the reasons behind UBS’ banking licence being put on hold, he said: “It is a policy of our association to not comment on specific banks and I would urge you to ask a UBS spokesman. We cannot comment on behalf of UBS.”
He, however, said: “Privacy law in Switzerland prohibits any bank from talking about a client’s private affairs, but it does not prevent the bank from giving relevant information to the Swiss government.”
The multinational trail of money transfers—across Switzerland, New York, the British Virgin Islands and Pune—between Indian stud farm owner Hasan Ali Khan and the Saudi arms dealer is still unresolved.
Currently, UBS is present in India through UBS Securities India Pvt. Ltd, a broking and investment banking arm, headed by Manisha Girotra. It also runs a private wealth management business and an offshore unit in Hyderabad.
Mirabaud is here as head of SBA’s first-ever delegation to start a dialogue with the regulators and key players in India’s financial markets. The delegation met officials of RBI, the Securities and Exchange Board of India, the India Banks’ Association, the Federation of Indian Chambers of Commerce and Industry, the Swiss-Indian Chamber of Commerce and representatives of Swiss banks working in India, and was scheduled to meet officials from the finance ministry in New Delhi on Tuesday evening.
“The dialogue was very useful to resolve certain misunderstandings,” he said. “It is not always known how much Switzerland government does to fight money laundering, crime and cooperate with foreign governments when they have requirement of information for criminal offences. We call it mutual assistance.”
He also said it would be advisable for a globalized economy and an important financial destination such as India to make access to its financial markets more predictable and more even. Current procedures, according to him, are very complicated. It would be helpful if the communication between the finance ministry, central bank and the capital market regulator is more “unified”.
There are several Swiss banks, Mirabaud said, who would like to open full branches in India, and “we just expect the relevant authorities to grant the licences”. Currently, no Swiss bank has a presence in the commercial banking space in India.
Between July 2006 and June 2007, RBI gave licences to seven foreign banks operating in India for opening 20 branches. In addition, it allowed seven foreign banks to open representative offices here.
Under World Trade Organization (WTO) guidelines, the Indian banking regulator is required to offer 12 new licences every year to foreign banks.
At the end of October, 29 foreign banks from 19 nations were operating in India with 273 branches.