Up from 803.6 tonnes as of December end according to the latest data, the RBI held 827.69 tonnes worth of gold as a part of its foreign exchange reserves as of April 26, 2024. It is said that more than half of RBI’s gold reserves are kept in safe custody overseas with the Bank of England.
It has come to our notice that the Reserve Bank of India (RBI) has shifted over 100 tonnes of gold from the UK into the in-house vaults in the country. And in the coming months, a similar amount of the yellow metal may again be brought into the country as per a credible source.
Since 1991, this is the first time that the precious metal has been brought back and added to the stock that will be kept in the country. Furthermore, up from 803.6 tonnes as of December end according to the latest data, the RBI held 827.69 tonnes worth of gold as a part of its foreign exchange reserves as of April 26, 2024. More than half of RBI’s gold reserves are held overseas in safe custody with the Bank of England and the Bank of International Settlements, and about a third of it is stored domestically.
This dramatic move will also help RBI to save storage costs which are being paid to the Bank of England. It was back in 1991 that the Chandra Shekhar government had pledged the precious metal will be utilized to tackle the balance pertaining to the payments crisis.
The RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise USD 400 million between. This was carried out between July 4 and 18 in the year 1991. If we go back, the central bank had bought 200 tonnes of gold from the International Monetary Fund around 15 years ago.
Furthermore, during the UPA government’s tenure in 2009 wherein Manmohan Singh was the Prime Minister, India had bought 200 tonnes of gold which was valued at USD 6.7 billion. This move was carried out to diversify its assets. A steady build-up in gold stocks has taken place through purchases by the Reserve Bank in India in the last few years.
As a hedge against inflation and foreign currency risks, the central bank's objective of holding gold in reserves is mainly towards diversifying its foreign currency assets base. And since December 2017, the RBI has started to accumulate gold regularly from the market.
With this, the share of gold with respect to the country's total foreign exchange reserves has increased from 7.75 percent at the end of December 2023 to around 8.7 percent as of April 2024 end. Also, the gold is held in vaults in RBI’s building on Mumbai’s Mint Road as well as Nagpur within the country.
With reserves topping 36,699 metric tons as of 2023 year-end, the global central banks own about 17 percent of all the gold ever mined. They acquired this vast majority in the span of 14 years after becoming net buyers of the metal in 2010.
