The Reserve Bank of India has moved around 100 tonnes of gold ( 1 lakh kilograms) from the United Kingdom to its vaults in India, and is mulling to continue to do so in the coming months, a TOI report claimed on Friday.
This marks the first instance since 1991 when India has moved such a huge scale of gold. In recent years, India has proactively purchased gold and has decided to undertake a review of where it wants to store that gold from time to time.
Rising gold reserve
According to official data, the RBI held 822.1 tonnes of gold in March. Out of this, 413.8 tonnes were stored overseas. The RBI has added 27.5 tonnes to its reserve in the last financial year. As per the annual report of the central bank for FY24 released on Thursday, over 308 metric tonnes of gold is held in India as backing for notes issued, while another 100.28 tonnes is held locally as an asset of the banking department.
Additionally, the central bank bought 1.5 times more gold in January-April 2024 than what it bought in 2023.
“RBI started purchasing gold a few years ago and decided to undertake a review of where it wants to store it, something that is done from time to time. Since stock was building up overseas, it was decided to get some of the gold to India,” the report quoted an official as saying.
Traditionally, many countries have been storing their overseas gold in the Bank of England, UK. India too used the Bank of England as the repository for some of its gold since before independence.
India decided to take back some gold to its vault in the country as the size of its gold reserve overseas is increasing. According to the report, this has been done for logistical reasons as well as diversity of storage. In India, the gold is stored in the RBI's old office building on Mumbai's Mint Road and in Nagpur.
“It shows the strength of the economy and the confidence, which is in sharp contrast to the situation in 1991,” a source said.
Notably, back in 1991, the RBI faced severe criticism for pledging part of its gold reserves as the country was undergoing a foreign exchange crisis.
Logistical challenge
RBi pulled the transfer of gold by carrying out a huge logistical exercise involving close coordination among the Finance Ministry, RBI, and several other wings of government.
At first, the central bank got the customs duty exempted to ship the yellow metal into the country. As gold is a sovereign asset, the exemption became a “foregoing revenue” for the centre.
However, the import was not exempted from integrated GST as part of it is shared with the states.
The RBI also took a special aircraft to fly the said quantity of gold with detailed security arrangements. This took months of planning with a precise focus on execution.
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