Manas Dasgupta
NEW DELHI, May 41: The Reserve Bank of India (RBI) has moved over 100 tonnes of gold from the Bank of England in the United Kingdom to its domestic vaults, official sources said on Friday.
It was the first time at least since early 1991 when the precious yellow metal at this scale has been added to the stock held locally. The Indian central bank will also be bringing more similar quantity of gold to the country in the coming months, sources said and added the transfer to India was for logistical reasons and for diversified storage.
This is one of the biggest movements of gold undertaken by the country since 1991, when pledging a substantial part of the gold holding to tide over a foreign exchange crisis resulted in its movement out of India.
Noted economist Sanjeev Sanyal, who is also the Prime Minister’s Economic Advisor, in a post on X said, “While no one was watching, RBI has shifted 100 tonnes of its gold reserves back to India from UK. Most countries keep their gold in the vaults of the Bank of England or some such location (and pay a fee for the privilege). India will now hold most of its gold in its own vaults. We have come a long way since we had to ship out gold overnight in 1991 in the midst of a crisis.”
The country’s overall gold holding increased 27.46 metric tonnes in FY24 and it stands at 822 metric tonnes, as per official data. A substantial part of the precious commodity is stored abroad and India also had its holding with the Bank of England like other countries.
The movement of 100 metric tonnes into India has taken the overall quantity stored locally to over 408 metric tonnes of gold, which means the local and foreign holding is now split almost evenly. As per the annual report of the central bank for FY24 released on Thursday, over 308 metric tonnes of gold is held in India as backing for notes issued, while another 100.28 tonnes is held locally as an asset of the banking department. Of the overall gold reserves, 413.79 metric tonnes are held abroad, the annual report said.
Officials from the Ministry of Finance, the RBI and other agencies took care of the movement of gold in complete secrecy given the high value, as per the sources. At present, the gold held locally is stored at high security vaults and facilities in Mumbai and Nagpur, the sources added. Sources said given the gold buying over the last few years, a call was taken to reduce the holding abroad which is part of the standard review procedures.
In 2009, India had bought 200 tonnes of gold from the International Monetary Fund, after which it has been buying the precious commodity from the secondary market as part of its foreign exchange asset diversification efforts.
Central banks globally have been increasing reserves held in gold, often seen as a hedge against currency volatility and geopolitical risks. The RBI decided to move gold to India as the stock was building up overseas, sources said.
According to the latest note by the World Gold Council (WGC), the RBI bought 19 tonnes of gold in the first quarter of the current calendar year 2024 (Q1-CY24 / Q4-FY24). This dwarfs the 16 tonnes of gold it bought in the whole of 2023. The RBI started buying gold in the calendar year 2018. Before that, it had purchased 200 tonnes in 2009 during the global financial crisis. At the end of March 2024, the RBI held 822.10 tonnes of gold, of which 408.31 tonnes were held domestically.
According to the latest data available till May 17, India’s gold reserves with the RBI currently stand at $57.195 billion. During the week ended May 17, India recorded third consecutive weekly increase in its overall foreign exchange (forex) reserves.
India’s forex reserves jumped $4.549 billion to a new all-time high of $648.7 billion for the week ended May 17. For the week ended April 5, the reserves had hit an all-time high of $648.562 billion following multiple weeks of increases.
