The Reserve Bank of India (RBI) has brought back 100 tonnes, i.e. 1 lakh kilograms of India’s gold kept in Britain. Not only this, the same amount of yellow metal would be brought into the country in the coming months. The gold was pledged in 1991.
The entire process of bringing 100 tonnes of gold to India, which took months, was kept a top secret. Bringing such a large amount of gold from London to New Delhi was not an easy task. With months of thorough planning, obtaining consent, and approval from various agencies in both countries, the gold from Britain reached the Indian treasury.
More than half of the RBI’s gold reserves are safely held abroad with the Bank of England and the Bank of International Settlements. About a third of these are held locally. Bringing gold from Britain to India will also help the Reserve Bank of India save on storage costs (RBI Gold Stock Cost), which are paid to the Bank of India.
Bringing the gold to India involved coordination between the finance ministry, the RBI, and other branches of government, including local authorities. Very strict security arrangements were made to keep the entire process of bringing gold secret.
RBI is exempted from customs duty, but there was no exemption from integrated GST on imports, as the tax is shared with the states. A special plane was arranged as 1 lakh tonnes of gold could not come in any normal plane.
Though no official information has been given, it is speculated that upon reaching India, the gold will be kept in the old RBI office building in Nagpur and on Mint Road in Mumbai. Strict security arrangements have been made in both these places. 24-hour security guards are stationed.
According to annual data released by the RBI, the central government held 822.10 tonnes of gold as part of its foreign exchange reserves as on March 31, 2024, as against 794.63 tonnes during the same period last year. In 1991, the Chandrasekhar government pledged gold to deal with a balance of payment crisis. Between July 4 and 18, 1991, the RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million.
The RBI bought 200 tonnes of gold from the International Monetary Fund (IMF) about 15 years ago. In 2009, during the tenure of the UPA government, when Manmohan Singh was Prime Minister, India bought 200 tonnes of gold worth $6.7 billion to diversify its wealth. Not only this, there has been a steady increase in the gold stock purchased by the Reserve Bank in the last few years.
The purpose of holding gold in stocks by the central bank is primarily to diversify the base of foreign currency assets as a hedge against inflation and foreign exchange risks. RBI has started collecting gold regularly from the market since December 2017. The share of gold in the country’s total foreign exchange reserves was to increase from 7.75 percent at the end of December 2023 to about 8.7 percent by the end of April 2024.
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