The Reserve Bank of India (RBI) has made a significant decision to shift 100 metric tonnes of its gold reserves from the United Kingdom to its own vaults in India. This move, according to RBI Governor Shaktikanta Das, is due to the ample storage capacity available domestically and should not be interpreted as anything more than a logistical decision.
In recent years, the RBI has been increasing its gold reserves, prompting the need to utilize domestic storage facilities. Economist Sanjeev Sanyal noted that India will now hold most of its gold in its own vaults, marking a departure from the common practice of storing gold in foreign locations and paying fees for the service.
The decision to transfer the gold reserves is also expected to result in cost savings, as high fees were previously paid for the use of vaults in the UK. This marks the first large-scale overseas transfer of gold reserves since 1991, when India pledged gold to raise funds during a severe foreign crisis.
The RBI currently holds a total of 822.10 tonnes of gold as part of its foreign exchange reserves, with a strategic focus on hedging against inflation and reducing foreign currency risks. The recent increase in the share of gold in India’s total foreign exchange reserves underscores the central bank’s commitment to holding gold as a safe-haven asset, particularly in times of uncertainty fueled by geopolitical tensions.
