India’s central bank shifts approximately 100 tonnes of gold from UK to domestic vaults, with further relocation planned, as per TOI. This notable transfer, the first since 1991, tackles logistical and storage diversity issues. The Reserve Bank of India, holding 822.1 tonnes of gold as of March, collaborates closely with government bodies and utilizes special aircraft for secure transportation.
India’s central bank relocates approximately 100 tonnes or 1 lakh kilograms of gold from the United Kingdom to its vaults in India, with plans for further transfers in the coming months, as per a Friday report from TOI.
The RBI’s transfer of over 100 tonnes of gold from the UK to its domestic vaults signifies the first such addition to local stock since early 1991, as reported by Times of India. The central bank plans to bring a similar quantity of gold to India in the coming months, citing logistical and storage diversification reasons.
As of March 2024, RBI possessed 822.10 tonnes of gold, with 408.31 tonnes held domestically. Central banks worldwide have been boosting gold reserves, viewing it as a hedge against currency volatility and geopolitical risks. TOI reported that Reserve Bank of Indiaopted to transfer gold to India due to overseas stock accumulation.
Per the latest World Gold Council (WGC) note, Reserve Bank of India acquired 19 tonnes of gold in Q1-CY24, surpassing the 16 tonnes bought in all of 2023. RBI began gold purchases in 2018; prior to that, it acquired 200 tonnes during the 2009 global financial crisis.
As of March 2024, RBI’s total gold reserves amount to 822.10 metric tonnes. A significant portion is stored abroad, including with the Bank of England. The recent transfer of 100 metric tonnes to India increases the local stock to over 408 metric tonnes, nearly equalizing the domestic and foreign holdings. The FY24 annual report reveals 308 metric tonnes are held in India for note backing, with an additional 100.28 tonnes held locally as a banking department asset.
Historically, during the 1990-91 forex crisis, India pledged some gold reserves to the Bank of England for a $405 million loan, repaid by November 1991. RBI opted to retain the gold in the UK for logistical reasons. Overseas gold storage allows for easy trading, swaps, and returns. However, geopolitical tensions pose risks, exemplified by recent Russian asset freezes, prompting RBI to repatriate gold from the UK.
The RBI, with government consultation, can utilize domestically stored gold to regulate local gold prices, particularly amid high demand for investment vehicles like gold exchange-traded funds, fostering a robust local bullion market while retaining gold reserves within the country.
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