India and Switzerland have signed a MoU on Financial Dialogue that will pave the

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way for greater cooperation between the two countries' tax authorities, a move that will allow unearthing black money stashed in Swiss banks.

The agreement signed by Indian Ambassador to Switzerland Chitra Narayanan and Swiss Department of Finance Secretary Michael Ambuhl comes close on the heels of the signing of an amending protocol to the Double Taxation Avoidance Agreement.

The MoU was signed yesterday in the presence of President Pratibha Patil, who is on a state visit here, and her Swiss counterpart Micheline Calmi-Rey.

The MoU deals with creation of a useful forum for exchange of views on financial and macro-economic issues.

Official sources said the MoU will facilitate dialogue between the tax authorities of the two countries.

"We noted that the amending protocol to the Double Taxation Avoidance Agreement would provide a framework for exchange of tax related information of importance to either side, when it enters into force," Patil said in a statement.

India is taking several measures to detect illegal funds stashed in various tax haven nations and foreign shores. A number of tax exchange information treaties are being signed and revised by the country.

Meanwhile, the Swiss government said in a statement that the financial dialogue under the MoU will allow the Swiss and Indian authorities to establish regular and privileged contacts in the financial sector "to identify common interests and to work together to achieve them".