📷 Image Credits: The Times of India
The Reserve Bank of India (RBI) has seen a significant drop in its overseas gold reserves, reaching a six-year low of 47% by March 2024. This decline marks the lowest percentage since 2017, indicating a noteworthy shift in the central bank’s gold storage strategy. One of the key reasons behind this change is the growing trend among central banks to bring back their gold reserves to their home countries.
This movement of gold back to India started in March 2022, coinciding with the Russia-Ukraine conflict, showcasing a cautious approach by the RBI and other central banks. The recent transfer of over 100 tonnes of gold from the UK to India, one of the largest movements since 1991, further accentuates this shift in strategy.
The decision to bring back gold reserves to India is attributed to the ample domestic storage capacity available and the need for increased security and control over the precious metal. By the end of March 2024, the RBI’s total gold holdings amounted to 822.1 tonnes, with a significant portion retained in foreign vaults.
Storing gold overseas comes with its own set of risks, including geopolitical tensions and uncertainties surrounding international assets’ safety. Recent events like the freezing of Russian assets and concerns over the UK economy have likely influenced the RBI’s decision to prioritize domestic storage.
Overall, the RBI’s move to bring back its gold reserves to India highlights a shift towards a more secure and controlled storage approach, ensuring the protection and stability of the country’s valuable assets.
