Unearthing black money can add $30 billion to forex reserves

The unearthing of capital flight of "black" money Indians have allegedly stashed away in Swiss banks could add $30 billion to the country's forex reserves, says a Bank of America Merrill Lynch report.

According to the global financial services major, though there would not be any immediate forex impact given the legal issues involved, it could add $30-35 billion to the forex reserves over time.

BofA-ML has worked with an estimate of capital flight of about $200 billion based on a recent research study.

According to the study, Raghbendra Jha and Duc Nguyen Truong, of AustralianNationalUniversity, estimated total capital flight of more than $186 billion during 1998-2012.

"If even half of this is unearthed, it could add $30-35 billion (three to four months of current import cover) to forex reserves over time," BofA-ML said in a research note

.The Centre on Wednesday placed a list of names of 627 Indian account holders in HSBC bank, Geneva in black money case before the Supreme Court which asked SIT to go through the list and take appropriate action in accordance with law.

A bench headed by Chief Justice H L Dattu did not open the sealed envelope containing the names placed by the Centre and said that it would be opened only by the Chairman and Vice-Chairman of the Supreme Court-appointed Special Investigation Team (SIT). It asked the SIT to submit status report of its probe by November-end.

Placing the documents before the bench, Attorney General Mukul Rohatgi said details of account holders are of year 2006 which were supplied by the French government to the Centre in 2011.

The report further noted that rupee is expected to hold Rs 58-62/USD and BofA-ML's Asia forex strategist, Adarsh Sinha, forecasts INR to be at Rs 61/USD in December.