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Central banks have bought gold all over the world in recent years
The Reserve Bank of India (RBI) has brought back around 1 lakh kilograms, or 100 tonnes, of gold from the Bank of England in the United Kingdom to its vaults in the country, in the first such massive transfer move since 1991. With this move, the RBI aims to substantially save on the storage cost being paid to the Bank of England.
India’s central bank stores over 50 per cent of its gold reserves abroad, in the Bank of England and the Bank of International Settlements for the purpose of security. Around one-third of the country’s gold reserves is stored domestically.
As of March 31, 2024, the RBI has 822.10 tonnes of gold as its foreign exchange reserves, compared to 794.63 tonnes of the precious metal that the central bank held for the purpose around the same time the year before, according to the RBI’s annual data.
Gold accounts for an 8.7 per cent share in India’s total foreign exchange reserves as of April 2024. The figure stood at 7.75 per cent in the end of December last year.
Globally, central banks such as the RBI, hold around 36,699 metric tonnes of gold as of December-end in 2023, according to the World Gold Council. This is nearly 17 per cent of the total gold that was ever mined. In India, gold is stored in the RBI’s vaults at Mint Road, Mumbai, and in Nagpur.
LOOKING BACK: THE 1991 PLEDGE & ENSUING BUYS
Back in 1991, the Chandra Shekhar government had pledged 46.91 tonnes of gold million between July 4 and 18 with the Bank of England and the Bank of Japan to raise $400 million. The move was aimed at tackling the balance of payments crisis.
About 15 years ago, during the Manmohan Singh government, the RBI purchased 200 tonnes of gold from the International Monetary Fund, or IMF. The government bought another 200 tonnes of gold in 2009, at $6.7 billion, in a bid to diversify assets. The RBI has retained a stable build-up of gold stock in recent years mostly through buying, and since December 2017, has been consistently purchasing gold.