RBI transfers 100,000 kg of gold from UK to Indian vaults: Report
PTC News Desk: According to Business Today, which cited sources, the Reserve Bank of India (RBI) has transferred almost 100 tonnes (1 lakh kilos) of gold from the United Kingdom to its vaults in India.
This is the first time India has attempted a transfer of this magnitude of gold reserves since 1991.
About one-third of the RBI's gold reserves are kept locally, with the remaining more than half being held in safe custody with the Bank of International Settlements and the Bank of England abroad.
It should be mentioned that the RBI anticipates saving money by making this decision instead of paying the Bank of England's storage charges.
According to the yearly figures issued by the RBI, as of March 31, 2024, the central bank has 822.10 tonnes of gold in its foreign exchange reserves, up from 794.63 tonnes held at the same time the previous year.
"While no one was watching, RBI has shifted 100 tonnes of its gold reserves back to India from UK," noted eminent economist Sanjeev Sanyal.
"The majority of nations store their gold in the Bank of England's vaults or another similar place (and pay a fee for the privilege). The majority of India's gold will now be kept in its own vaults. Since we had to ship away gold overnight in 1991 during a crisis, we have gone a long way," he continued.
"The 1990–1991 gold shipment crisis was a catastrophic event that my generation will never forget. This is the reason this gold shipment return has particular significance," he continued.
What took place in 1991?
When the Chandra Shekhar government faced a dire balance of payments problem in 1991, it raised money by pledging gold. The Reserve Bank of India (RBI) secured $400 million by pledging 46.91 tonnes of gold to the Bank of England and the Bank of Japan between July 4 and July 18.
About fifteen years ago, while Prime Minister Manmohan Singh's United Progressive Alliance (UPA) government was in power, the RBI invested $6.7 billion to buy 200 tons of gold from the International Monetary Fund (IMF) in order to diversify its holdings.
The RBI has steadily increased its gold reserves in recent years. The central bank's foreign exchange asset diversification, inflation hedging, and foreign exchange risk mitigation are the main goals of its gold holdings strategy.
The RBI has been consistently purchasing gold from the market since December 2017.
As a result, by the end of April 2024, the proportion of gold in India's overall foreign exchange reserves had risen from 7.75% at the end of December 2023 to almost 8.7%.
Inside the country, gold is kept in vaults in the RBI facilities in Nagpur and on Mumbai's Mint Road.
A World Gold Council analysis states that by the end of 2023, reserves held by central banks worldwide would total 36,699 metric tons, or around 17% of all gold ever mined. It is noteworthy to note that since central banks started buying gold on a net basis in 2010, the majority of these purchases have taken place during the past 14 years.
- With inputs from agencies
