HSBC Sweet talks to Walk Out of Trouble?

Hong Kong and Shanghai Banking Corporation [HSBC] released its Global Trade Forecast yesterday. HSBC’s forecast is both bold and beautiful. Moreover, it is highly courageous [or foolhardy]. It dares to look beyond 2015, even 2020. What its crystal gazing told the bank sounded like sweet music to Indian years. Bank must surely be hoping that P Chidambaram, Finance Ministry mandarins, and taxmen in the income tax department -especially its Investigation and Prosecution wing- are listening. Hoping hard that they are taking note of the sterling role bank can play, has played, and will play to sell India story to the world and to add cheer to markets otherwise  for long harassed by gloom. Bank must also be banking that the Maxim -One Good Turn Deserves Another- is respected by its target audience. But before that a look at the fairytale.

^^

Rising bilateral trade with China, growing consumer wealth and high confidence level among its traders will push India to the top league of trading nations beginning 2013 and it is set to retain the fastest growth rate till 2020, says HSBC. “The growing Indo-China bilateral trade is set to increase significantly and the country will be the fastest expanding market for Chinese products, with import growth averaging 20 per cent annually during 2013-15 and 17 percent during 2016-20, while exports clipping at 23 per cent during 2013-15 and 19 percent during 2016-20,” says the HSBC trade forecast released today. India tops the tables for all 23 markets surveyed as either their fastest import or export growth partner out to 2020, it said. The country also tops the HSBC trade confidence index apart from having the most promising global outlook with 61 per cent of traders expecting to see growth. With a score of 135, India is the most confident country.

^^ 

The PR News wire at the end informs that Oxford Economics [a private company] -formerly Oxford Economic Forecasting- employs a global modelling framework that ensures full consistency between all economies, in part driven by trade linkages; and its service to HSBC is based on latter’s own analysis and forecasts of the world economy to generate a full bilateral set of trade flows for total imports and exports of goods, and balances between 180 pairs of countries. The forecast covers future in three periods: 2013-15, 2016-20 and 2021-30.  The news report has not disclosed 2021-30 data, may be out of sense of modesty. World Trade Organization [WTO] however has lowered world trade forecast for 2012 & 2013: ^^WTO cut its global trade growth outlook for next year to 4.5 percent from 5.6 percent.In April the WTO had warned that world trade growth, which slowed to 5.0 percent in 2011 after a big rebound of 14.0 percent in 2010, would weaken again this year.Director-general Pascal Lamy called for more to be done to boost global growth, on top of recent measures to to buy up government bonds announced by the central banks of the United States, Europe and Japan.The WTO revised projections for 2012 came as data showed global trade volume grew just 0.3 percent in the second quarter, significantly slower than the 1.2 percent seen in the previous three months^^. When almost everybody failed to predict the financial crisis of 2007-08 until it blew in the face, and since all forecasts about global  economic recovery made afterwards have gone awry; it takes a giant leap of faith to peer so far ahead into the future. Media in India is agog today with very bright future waiting to happen. That should surely catapult the Sensex into stratosphere, or so it is hoped, and bring cheer to PMO and Finance Ministry. Chidambaram should be grateful for any help he gets to talk up the economy. Would that gratitude translate into a sympathetic shoulder and a helping hand for HSBC? Surely that must be the hope.

1. HSBC secret accounts: Income Tax department to begin prosecution: ^^The Income Tax department has decided to begin prosecution action against those having “substantial” amounts in their bank accounts in HSBC’s Geneva branch. The department has now written to the finance ministry to suggest a benchmark for funds held on the basis of which the I-T department can initiate legal action for tax evasion and tax theft. The I-T department, through the finance ministry, has already approached Swiss revenue authorities for banking data of certain individuals after investigations showed some of them reportedly had other accounts under fictitious names^^.
2. Income tax department gets nod to prosecute employees at HSBC Geneva: ^^NEW DELHI: The income tax department plans to initiate prosecution proceedings against employees of HSBC Switzerland for allegedly helping Indians stash away illegal wealth in Swiss banks. The finance ministry has given permission to the income tax department to initiate action against employees of HSBC, an income tax official said. “The law empowers I-T authorities to launch prosecution in such cases even if it concerns nationals of other countries,” the official said on condition of anonymity. The official said several account holders who were found to have stashed away funds in Switzerland said the deposits and accounts were solicited by HSBC executives. He said the account holders have named those executives. India had, a year and a half back, received from the French government a list of 700 Indians who had bank accounts in HSBC Geneva. In 69 of the cases, the account holders have admitted to unaccounted income of Rs 397.17 crore, on which tax of about Rs 30 crore has already been paid. The IT department is likely to launch prosecution against the owners of these bank accounts as well after completing its assessment. Simultaneously, the department will take action against HSBC for abetting concealment of income and tax evasion^^.
3. India May Charge HSBC With Aiding Tax Evaders, PTI Reports: ^^India’s income tax department is considering prosecuting HSBC Holdings Plc (HSBA) for helping Indians hide money overseas, the Press Trust of India reported, citing people it didn’t identify. Rajesh Joshi, a spokesman for HSBC in Mumbai, declined to comment. To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net^^.

In March Bloomberg reported that HSBC bank will be prosecuted for aiding tax evasion. Economic Times wrote in July that employees at HSBC-Geneva will be prosecuted. Now the latest news  in Times of India dated 28 November says that Income Tax department has FM to fix threshold for prosecuting Indians found holding accounts at HSBC Geneva. Obviously, winds of change are palpably blowing at Finance Ministry. Is HSBC doing all it could to sail into those winds and help them blow harder?  

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