RBI Transfers 100,000 kg of Gold from UK to Indian Vaults: Report
RBI Transfers 100,000 kg of Gold from UK to Indian Vaults: Report(Representational Image)
The Reserve Bank of India (RBI) has moved approximately 100 tonnes (100,000 kilograms) of gold from the United Kingdom to its vaults in India, according to Business Today, citing sources. This marks the first significant transfer of gold reserves by India since 1991.
Historically, over half of the RBI’s gold reserves have been held overseas, primarily with the Bank of England and the Bank of International Settlements, while about one-third is stored domestically. This recent move is expected to help the RBI reduce storage costs paid to the Bank of England.
As of March 31, 2024, the RBI held 822.10 tonnes of gold as part of its foreign exchange reserves, up from 794.63 tonnes the previous year, based on the RBI’s annual data.
Economist Sanjeev Sanyal noted, “RBI has shifted 100 tonnes of its gold reserves back to India from the UK.” He emphasized the significance of this move, contrasting it with the 1991 crisis when India had to pledge its gold to secure funds.
In 1991, during a severe balance of payments crisis, the Indian government pledged 46.91 tonnes of gold to the Bank of England and the Bank of Japan, securing $400 million. This action was a pivotal moment for India, symbolizing economic distress.
In 2009, the RBI bought 200 tonnes of gold from the International Monetary Fund (IMF) for $6.7 billion, diversifying its assets. Since December 2017, the RBI has regularly acquired gold from the market, increasing the share of gold in India’s total foreign exchange reserves from 7.75% at the end of December 2023 to about 8.7% by the end of April 2024.
The central bank’s strategy of holding gold aims to diversify foreign currency assets, hedge against inflation, and mitigate foreign currency risks. Domestically, gold is stored in RBI vaults located on Mumbai’s Mint Road and in Nagpur.
A World Gold Council report states that global central banks held about 17% of all the gold ever mined, with reserves reaching 36,699 metric tons by the end of 2023. Most of these acquisitions occurred over the past 14 years, as central banks became net buyers of gold starting in 2010.
