In a historic development, the Reserve Bank of India (RBI) has started transferring more than 100 tonnes of gold from the Bank of England to its domestic banks. The mine is a significant milestone, as it marks the first time since 1991 that such a large amount of the precious metal has been added to reserves across the country’s borders.
Industry sources have speculated that the RBI may introduce more gold in India in the coming months after the initial launch. The central bank’s current holdings of gold stand at an impressive 827.69 tonnes, reflecting an increase in gold reserves of 803.6 tonnes as at the end of December last year.
Traditionally, the RBI has relied on safe gold reserves provided by foreign companies, and the central bank remains the primary custodian of more than half of the gold reserves but that decision the recent move to increase gold holdings in the country has not only increased India’s reserves.
- 46.91 tonnes of gold was pledged by the Bank of England and the Bank of Japan in exchange for $400 million as a result of the 1991 liquidity crisis in the Chandrashekhar government.
- In addition, the central bank received 200 tonnes of gold from the International Monetary Fund (IMF) about 15 years ago.
- India’s desire to diversify its assets was evident in 2009 under then Prime Minister Manmohan Singh and the UPA government, when the country bought 200 tonnes of gold, worth $6.7 billion which surprise, to increase its reserves.
This gold reserve management by the RBI aims to diversify the country’s foreign exchange reserves, act as a hedge against inflation and reduce foreign exchange risk The central bank’s active hoarding of gold from the market, since December 2017, focuses on the precious metal’s continued importance in its reserve management program.
This rise in gold volume has increased the gold proportion of India’s total foreign exchange reserves from 7.75 per cent by the end of December 2023 to about 8.7 per cent by the end of April 2024. Domestic denomination kept to ensure their safety and security, RBI has its vault at the Mint Road building in Mumbai, Nagpur It even holds gold coins.
The World Gold Council report revealed that global central banks, over the past 14 years, have been actively accumulating gold and buying the metal consistently since 2010. All of these central banks all have gold mines so far about 17 percent of the total, 36,699 exceed metric sales by the end of 2023.
The RBI’s recent decision to swap gold marks a fundamental shift in its gold reserve policy, as it places greater emphasis on strengthening domestic reserves and establishing independents to the foreign overseer. Apart from strengthening reserves, this move also enables the RBI to optimize cost of reserves and exercise greater control over its gold assets.
Industry experts predict that the RBI’s actions will further build India’s gold market momentum and reaffirm the country’s position as one of the world’s leading gold reserves. The central bank’s approach to gold reserves reflects its commitment to diversifying assets, safeguarding financial flexibility and strengthening India’s position in the global economy.
