RBI’s foreign gold reserves hit 6-year low, domestic reserves touch 53%

The Reserve Bank of India’s foreign gold reserves hit the lowest since December 2017, with overseas holdings dropping to 47% of the total by the end of March 2024.

Last month, the RBI transferred 100 tonnes (1 lakh kg) of gold back to India from the Bank of England (BoE).

“We have domestic capacity now, and we felt part of the gold should be stored within the country. That is it. Nothing more should be read into it,” RBI Governor Shaktikanta Das had said earlier this month.

RBI data shows an increase in domestic gold holdings since March 2022, concurrent with the beginning of the Russia-Ukraine war. This decision is in line with central banks’ globally reacting with caution after the US froze Russia’s foreign currency assets in February 2022.

India’s total gold reserves were up to 822.1 tonnes and its at-home holdings stood at 53% as of March 2024, this is a significant upturn from the 39% in September 2021.

Source: RBI, Author’s own calculations

The RBI keeps a part of its gold reserves abroad with the BoE in the UK and the Bank of International Settlements (BIS), in Basel, Switzerland.

Why does the RBI store gold abroad?

During the 1990-91 Balance-of-Payment crisis, India had pledged 46.91 tonnes of gold in four instalments to the Bank of England (BOE) to raise a loan worth $405 million and as a part of its reserve management policy.

Although the loan was repaid by India between September and November 1991, the RBI continued the practice of keeping a part of its gold reserves abroad for logistical reasons.