RBI transfers 100 tonnes of gold from UK to domestic vaults in India

The Reserve Bank of India (RBI) has transferred more than 100 tonnes of gold from the UK to India’s domestic vaults for the first time since early 1991. This move marks a significant addition to India’s locally held gold reserves, as reported by agencies, with another similar transfer expected in the coming months.

As of March, the RBI had a total of 822.1 tonnes of gold, with 413.8 tonnes held overseas. The central bank, along with others globally, has been increasing its gold holdings, acquiring 27.5 tonnes in the last financial year, according to reports.

Like several other central banks, the Bank of England has served as a repository for a portion of India’s gold reserves, a practice dating back to pre-Independence times.

An official cited in the report stated, “The RBI started purchasing gold a few years ago and decided to undertake a review of where it wants to store it, something that is done from time to time. Since stock was building up overseas, it was decided to get some of the gold to India.”

Gold holds significant cultural and emotional value in India, especially after the Chandra Shekhar government’s decision to pledge gold to address the balance of payments crisis in 1991.

Approximately 15 years ago, the RBI purchased 200 tonnes of gold from the International Monetary Fund (IMF). In recent years, the central bank has consistently accumulated gold reserves through acquisitions by the Indian central bank.

A source quoted in the report said, “It shows the strength of the economy and the confidence, which is in sharp contrast to the situation in 1991.”

The RBI received a customs duty exemption for the importation of gold, with the government ‘foregoing revenue’ on this sovereign asset. However, integrated goods and services tax (GST), applicable on imports and shared with the states, was not exempted, according to the report.

Transporting such a substantial quantity of gold required a special aircraft, along with extensive security measures. This transfer will also allow the RBI reduce storage expenses incurred with the Bank of England.

Domestically in India, the gold is stored in vaults at the RBI’s former office building on Mint Road in Mumbai and in Nagpur.

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