India RBI Gold Reserve: Why the Central Bank Keeps Golds in Foreign Vaults

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india rbi gold reserve

India RBI Gold reserve are principally held by the Bank of England, the Bank for International Settlements (BIS) in Switzerland, and the Federal Reserve Bank of New York.

The Reserve Bank of India transferred 100 metric tonnes of gold from the United Kingdom to domestic vaults in FY24, one of the largest gold transactions since 1991, according to the report. The nation’s total gold holdings are now 822 metric tonnes in FY24, with the majority of it kept in overseas vaults, including the Bank of England.

The action comes amid international conflict and a Western-led freeze on Russian assets, heightening fears about the safety of foreign assets.

A country’s central bank maintains gold reserves as a backup to financial assurances and a store of value. India, like other countries, keeps a portion of its gold reserves in overseas vaults to decrease risk and promote international trade.

India RBI Gold Reserve: Where does the RBI store its gold?

India RBI gold reserve are primarily held with the Bank of England, which is noted for its stringent security standards. The RBI maintains some of its gold reserves with the Bank for International Settlements (BIS) in Basel, Switzerland, and the Federal Reserve Bank of New York in the United States.

India RBI Gold Reserve: Why does the RBI store gold in foreign banks?

During India’s foreign exchange crisis in 1990-91, the country pledged some of its gold assets to the Bank of England to get a $405 million loan. Although the loan was repaid in November 1991, India chose to keep the gold in Britain for convenience.

Keeping gold abroad facilitates India’s trade, exchange, and revenue generation. However, it carries risks, especially in times of international conflict and war. The recent seizure of Russian assets by Western countries has increased concerns about the security of assets overseas, and the RBI’s intention to transfer a portion of its gold assets to India could worsen these fears.

India RBI Gold Reserve: Why does the RBI require so much gold?

The RBI uses some of its vast gold assets to help manage local gold prices in India. Bank authorities have recently purchased more gold, particularly as many other countries have lost confidence in the US dollar. In the prior financial year, the RBI acquired around 27.47 tonnes of gold to its total reserves, boosting them to 794.63 tonnes. Increasing gold reserves serve as a protection against financial crises, as well as measures to regulate inflation and depreciation of currencies.

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