Why did RBI move 100 tonnes of India’s gold reserves back into the country? TOI was the first to report about the central bank’s decision to bring back such big amount of gold back into India from the UK.
Shaktikanta Das, the governor of the Reserve Bank of India, has now explained the rationale behind the decision to bring 100 tonnes of gold back to the country.He has said that the amount of gold held outside India had increased due to RBI’s purchases, and since there was available storage capacity within the country, a portion of the gold was decided to be stored domestically.
Das said that the quantity of gold held by RBI had remained unchanged for an extended period. However, as RBI continued to purchase gold as part of its reserves management strategy, the amount of gold stored outside the country kept increasing. Given the domestic storage capacity, it was deemed appropriate to store a portion of the gold within India.
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“The quantum of gold held by RBI was static for a long time. As data shows, RBI was buying gold as part of its reserves management, and the quantum of gold held outside was going up. We have domestic capacity, and we felt part of the gold should be stored within the country. There is nothing more to it,” Das said.
When asked about the Rangarajan committee’s recommendation from 1993, which suggested that at least 25% of the gold reserves should be held overseas, Das pointed out that significant changes have occurred since then. He mentioned that a high-level committee is currently responsible for managing such matters.
Das expressed astonishment that only one media outlet had reported on the relocation of 100 tonnes of gold from the UK to RBI’s vaults in India, which was first reported by TOI on May 31, 2024. Now, approximately half of the gold is stored in vaults within the country.
In an unprecedented move since early 1991, RBI has added a substantial quantity of precious metal to its domestic stock. Sources had told TOI that a similar amount of gold may be transferred to locations within the country in the coming months for logistical reasons and diversified storage.
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RBI’s latest data shows that as of March-end, it held 822.1 tonnes of gold, with 413.8 tonnes stored overseas. The central bank has been among those that have purchased gold in recent years, adding 27.5 tonnes during the last financial year. Traditionally, the Bank of England has been the storehouse for many central banks, including India, with some of the yellow metal stocks dating back to pre-Independence days.
The transfer of 100 tonnes of gold, nearly a fourth of the country’s stock at the end of March, was a complex logistical undertaking that required months of meticulous planning and execution. It involved close coordination between various government entities, including the finance ministry, RBI, and local authorities, the TOI report said.
To facilitate the shipment, the Centre granted RBI a customs duty exemption, foregoing revenue on this sovereign asset. However, integrated GST, which is shared with the states, was still levied on the imports.
A special aircraft was used to transport the large quantities of gold, with extensive security arrangements in place. The move is expected to help RBI save on some of the storage costs paid to the Bank of England, although the amount is not significant.
Within India, gold is stored in vaults located in RBI’s old office building on Mint Road in Mumbai and in Nagpur.