RBI Moves 1 lakh kg Gold From UK to Indian Treasury: Report

The report said that the Reserve Bank of India transferred 1,00,000 kg of gold from the United Kingdom to its vaults in India. This milestone is unusual as India has not seen such a large shift in gold reserves since 1991.

The RBI moved 100 tonnes of gold from the UK to India’s storage, a significant increase in gold transfers after the 1991 financial crisis. Gold holdings till March 2024 now stand at 822.10 tonnes.

Business Today, citing sources, reported that the Reserve Bank of India (RBI) has transferred around 100 tonnes (equivalent to 1 lakh kg) of gold from storage in the United Kingdom to secure facilities in India.

Since 1991, India has not made such a large transfer of gold reserves.

More than half of the RBI’s gold reserves are held abroad with the Bank of England and the Bank of International Settlements, with about a third stored domestically.

The decision is expected to help the RBI to reduce the amount of funds spent on storage fees by the Bank of England.

According to data published by the RBI, the central bank has projected an increase in foreign exchange reserves of gold to 822.10 tonnes as on March 31, 2024, from 794.63 tonnes in the previous year.

Prominent economist Sanjeev Sanyal said , “While no one was watching, RBI has shifted 100 tonnes of its gold reserves back to India from UK.”

In many places the gold is kept in the Bank of England or some such place and fees are paid. India will now deposit most of its gold in its treasury. An official said, a lot of time has passed since 1991 when gold had to be sent out immediately due to any crisis.

For those of us who came of age in the 1990s, the gold rush failure of 1990–91 left an indelible mark. The current gold recovery has important symbolism because of that event.

What happened in 1991?

In 1991, to overcome the acute shortage of funds, the Chandrashekhar administration used gold to raise funds. Within a two-week period from July 4–18, the Reserve Bank of India (RBI) pledged 46.91 tonnes of gold to the Bank of England and the Bank of Japan, resulting in $400 million secured.

About 15 years ago, the Reserve Bank of India (RBI) had purchased 200 tonnes of gold from the International Monetary Fund (IMF) during the United Progressive Alliance (UPA) administration led by Prime Minister Manmohan Singh. The move served to expand its financial portfolio through a $6.7 billion deal.

In recent years, the RBI has consistently built up its gold reserves.

The central bank’s main goals in holding gold are to pool its foreign money resources, protect itself from rising prices, and reduce foreign exchange-related risks.

Since December 2017, the Central Bank of India has been continuously purchasing gold from the market. This increased the percentage of gold in India’s foreign exchange reserves from 7.75% in December 2017 to about 8.7% by April 2024.

Within India, gold is kept in secure vaults located at Mint Road in Mumbai and RBI facilities in Nagpur. The World Gold Council findings show that around 17% of the world’s total gold mining production is held by central banks globally, amounting to 36,699 metric tons by the end of 2023. It is noteworthy that most of these purchases were made within the last 14 years. Since 2010, central banks started becoming net buyers of gold.

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