RBI Repatriates 100 Tonnes of Gold from UK Vaults to India

New Delhi: In a significant move, the Reserve Bank of India (RBI) has reportedly transferred approximately 100 tonnes of its gold reserves from vaults in the UK to its own facilities in India. This marks the first large-scale overseas transfer of gold reserves by India since 1991.

Economist Sanjeev Sanyal, a member of the Prime Minister’s Economic Advisory Council, highlighted the significance of this action, stating that India now holds most of its gold in its own vaults, a departure from the common practice of storing gold in foreign locations and paying storage fees.

The transfer holds historical significance, particularly in light of India’s crisis in 1991 when gold had to be pledged to raise funds amidst a severe foreign currency crisis. At that time, 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 with institutions like the Bank of England and the Bank of International Settlements, while approximately one-third is stored domestically in Nagpur and Mumbai. The RBI’s total gold reserves stood at 822.1 tonnes as of March 31, 2024, reflecting an increase from the previous year.

The move aligns with the trend of central banks, including the RBI, increasing their gold holdings as a hedge against inflation and to mitigate foreign currency risks, especially during times of geopolitical uncertainty. As of April 2024, gold constituted about 8.7% of India’s total foreign exchange reserves, up from 7.75% in December 2023.