RBI repatriates gold reserves from UK, first move since 1991
The Reserve Bank of India (RBI) has successfully transferred a substantial amount of gold, exceeding 100 tons, from the United Kingdom to its vaults in India. This marks a significant milestone as it is the first time since early 1991 that such a large quantity of the precious metal has been added to the stock held locally. The move was driven by logistical considerations and a strategy for diversified storage.
RBI's gold reserves and future plans
As of March 2024 end, the RBI held a total of 822.1 tons of gold, with nearly half (413.8 tons) stored overseas. The central bank has been actively increasing its gold reserves in recent years, adding 27.5 tons during the previous fiscal year alone. Traditionally, the Bank of England has served as a storage facility for many central banks worldwide, including India.
RBI's strategy shift in gold storage location
An official told the Times of India that the RBI began purchasing gold a few years ago and periodically reviews its storage locations. The recent decision to repatriate some of the gold to India was made as overseas stocks were accumulating. This move is seen as a testament to the robustness of the Indian economy, contrasting with the 1991 scenario when gold was pledged to address a balance of payments crisis.
Extensive planning behind RBI's large-scale gold transfer
The gold repatriation process, which accounted for nearly a quarter of India's total reserves as of March end, required meticulous planning and execution over several months. It necessitated close collaboration between various government bodies, including the finance ministry, RBI, and local authorities. The RBI secured a customs duty exemption for importing this sovereign asset but paid an integrated GST as this tax is shared with states.
Special aircraft and security measures for gold transfer
A special aircraft was commissioned to transport the large quantity of gold under comprehensive security measures. The move is expected to reduce storage costs paid to the Bank of England, although these expenses are not significant. Within India, the gold will be securely stored in vaults situated at RBI's old office building on Mumbai's Mint Road and in Nagpur.
