The Reserve Bank of India (RBI) has made a significant move by transferring approximately 100 tonnes of gold from the United Kingdom to its vaults in India, marking the first such large-scale transfer since 1991. This action underscores a strategic shift in the management of India's gold reserves.
Currently, more than half of the RBI's gold reserves are held overseas, primarily with the Bank of England and the Bank of International Settlements, with only about a third stored domestically. This move is expected to help the RBI save on storage costs and consolidate its gold holdings within the country.
As of March 31, 2024, the RBI held 822.10 tonnes of gold as part of its foreign exchange reserves, with an increase from the previous year. Economist Sanjeev Sanyal highlighted the significance of this transfer, noting that it reflects a departure from the past practice of keeping most of India's gold reserves abroad.
The decision to transfer gold back to India carries historical significance, particularly in light of events such as the gold pledge in 1991 during a severe balance of payments crisis. In recent years, the RBI has been steadily increasing its gold reserves, diversifying its assets and hedging against currency risks and inflation.
The central bank's move aligns with a global trend among central banks, which have been net buyers of gold since 2010. With gold reserves reaching significant levels globally, central banks are prioritizing the diversification of their assets, with gold serving as a reliable store of value.
Overall, the transfer of gold reserves back to India represents a strategic decision by the RBI to strengthen its financial position and align its reserve management practices with global trends.
