The Reserve Bank of India (RBI) transferred over 100 tonnes of gold from the UK to its vaults in the country for the first time since 1991. More than half of the central bank's gold reserves are held overseas in safe custody with institutions like the Bank of England and the Bank of International Settlements, while approximately a third is stored domestically. This recent move will enable the RBI to save on its incurring storage costs by keeping the gold with the Bank of England.

According to the report, the Indian central bank plans to bring a similar quantity of gold to the country in the coming months. Citing sources, the report mentioned that the transfer to India was driven by logistical considerations and the need for diversified storage.

At the end of March 2024, the RBI held 822.10 tonnes of gold, of which 408.31 tonnes were held domestically.

Central banks globally have been increasing reserves held in gold, often seen as a hedge against currency volatility and geopolitical risks.

The RBI decided to move gold to India as the stock was building up overseas.

In 1991, the government had pledged the precious metal to tackle the balance of payments crisis as between July 4 and 18, 1991, the central bank pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million. Around 15 years ago, RBI bought 200 tonnes of gold from the International Monetary Fund (IMF).

The central bank's primary objective in holding gold reserves is to diversify its foreign currency assets base, serving as a hedge against inflation and foreign currency risks. Since December 2017, the RBI has been regularly accumulating gold from the market.

The share of gold in the country's total foreign exchange reserves has risen from 7.75 percent at the end of December 2023 to approximately 8.7 percent as of the end of April 2024.

Within the country, gold is stored in vaults located in the RBI's building on Mumbai's Mint Road as well as in Nagpur.

According to a report from the World Gold Council, global central banks collectively own approximately 17 percent of all the gold ever mined, with reserves surpassing 36,699 metric tons (MT) as of the end of 2023. The majority of these reserves were acquired in the last 14 years, with central banks becoming net buyers of the metal in 2010.

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