RBI recently relocated 102 tonnes of gold from the Bank of England’s vaults to secure facilities within India. The central bank has described this move as a step toward avoiding reliance solely on foreign reserves. India has been successful in repatriating 214 tonnes of gold since September 2022, highlighting the RBI's intent of retaining a larger share of its wealth within its own territories.
As per RBI's latest report on foreign exchange reserves, the central bank holds 510.5 tonnes gold out of the 855 tonnes domestically as of September end. This shift reflects geopolitical uncertainties that have come to rise and the government's security objective of having assets in the local, as opposed to foreign, hands.
India Repatriates 214 Tons of Gold Since September 2022 to Strengthen Foreign Reserves
This repatriation of part of India's gold reserves comes against a backdrop of increasing international tension and economic troubles. If these reserves are held abroad, it is considered a risk, while it is always safer to keep them in the country, government sources say. Reportedly, getting this gold moved was done with utmost secrecy through special aircraft, utilizing secure protocols. Interest based on the urgency of the crisis for people within the context.
However, this strategy sends a signal of the government to ensure the security of sensitive information and assets in the future as the international situation is becoming much more complicated. India is not new to shifting gold in bulk to its own territory, according to various media reports. Early this month, India had moved 100 tonnes from the Bank of England to domestic vaults in one of the largest transfers of gold since the 90s.
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In those days, India was so broke during a financial crisis that the government had to offer up gold as collateral. But this time, the action is preemptive, a determination to protect the nation's wealth, not a measure meant to combat an economic crisis.
Today, 324 tonnes of the Indian gold reserves are being retained under the custodianship of the Bank of England and the Bank for International Settlements, based in the UK. The Bank of England is a famous repository for other central banks around the world, serving as a "bullion warehouse" since 1697.
London also has a liquidity-based convenience with its bullion market. But sources say that India is not inclined to take out larger quantity of gold out of UK this year. According to reports, the share of gold in total foreign reserves of India has increased to 9.3 per cent, whereas this share was only 8.1 per cent in March end. The price is currently around Rs 78,745 in Mumbai per 10 grams supported by rally in gold prices globally.
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Just months ago hit record highs of Rs 85,000 per 10 grams and analysts expect prices to climb back there over the next 12 months, thanks to interest from investors turning to the safety of gold in times of economic uncertainty and regional conflicts involving Israel and parts of the Middle East.
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