RBI Transfers 100 Tonnes of Gold from UK to India to Cut Storage Costs
New Delhi: The Reserve Bank of India (RBI) has repatriated approximately 100 tonnes of gold from bank vaults in the UK to its own vaults in India, aiming to save on storage costs, according to media reports.
This marks the first significant overseas transfer of gold reserves by India since 1991.
Sanjeev Sanyal, an economist and member of the Prime Minister’s Economic Advisory Council, commented, “While no one was watching, RBI has shifted 100 tonnes of its gold reserves back to India from the UK.”
“Most countries store their gold in the vaults of the Bank of England or similar locations and pay a fee for this service. India will now hold most of its gold in its own vaults. This is a significant step forward from 1991 when we had to ship out gold overnight during a crisis,” he added.
“For those of my generation, the shipping out of gold in 1990-91 was a moment of failure that we will never forget. This is why the repatriation of gold has special meaning,” he pointed out.
In 1991, amid a severe foreign exchange crisis, the Chandra Shekhar government pledged gold to raise funds. The RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to secure $400 million.
Currently, more than half of the RBI’s gold reserves are held overseas in secure custody with the Bank of England and the Bank for International Settlements, while approximately a third is stored in the RBI’s vaults in Nagpur and Mumbai.
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, according to the annual data released by the RBI.
The RBI, like other central banks, has been purchasing gold as a safe-haven asset. This strategy aims to hedge against inflation and reduce foreign currency risks, especially during times of uncertainty triggered by geopolitical tensions.
The share of gold in India’s total foreign exchange reserves increased from 7.75 percent at the end of December 2023 to about 8.7 percent by the end of April 2024.
