MC Explains | How does RBI manage its gold reserves?

In FY24, RBI had gold reserves worth $52.67 billion in the total foreign exchange reserves which stood at $646.41 billion.

In 2023-24, the Reserve Bank of India (RBI) added 27.47 tonnes of gold to its reserves, pushing up its total stock to 822.10 tonnes from 794.63 tonnes a year back.

The central bank holds 309.03 tonnes of gold as backing for notes issued in India. Additionally, the RBI has gold (including gold deposits) held as assets of the banking department, including gold held abroad of 514.07 tonnes.

But how does the RBI manage its gold holdings and how has the gold reserves moved over years? Here is an explainer.

Also read: RBI brings home 100 tonnes of gold from UKr

First, how much gold does the RBI hold?

In its annual report for FY24, the central bank said that its total gold reserves stood at 822.10 tonnes. The reserves increased by 27.47 tonnes from 794.63 metric tonnes last year. In FY24, the RBI had gold reserves worth $52.67 billion in the total foreign exchange reserves which stood at $646.41 billion.

How much gold does RBI hold in India and abroad?

The RBI annual report said that the central bank has 309.03 tonnes of gold held as backing for notes issued in India. Additionally, the RBI said that its total gold which also includes gold deposits held as assets of the banking department, including gold held outside of India of 514.07 tonnes.

The RBI also said its balance sheet increased by Rs 7.02 lakh crore due to rise in foreign investments, gold, and loans and advances by 13.90 percent, 18.26 percent and 30.05 percent, respectively. “The RBI’s total balance sheet increased by Rs 7.02 lakh crore i.e.,11.08 percent from Rs 63.44 lakh crore as on March 31, 2023 to Rs 70.47 lakh crore as on March 31, 2024,” it said.

RBI moves gold from the UK to India

The RBI has brought home a little over 100 tonnes of gold from the UK, the Times of India reported on May 31. Gold at such a scale was added to the central bank treasury last in 1991. A similar quantity of the metal may be added to the RBI stock over the next few months for logistical reasons and diversified storage, the report said.

“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,” the daily quoted an official as saying. The RBI got a customs duty exemption to ship the precious metal into the country with the Centre “foregoing revenue” on what is a sovereign asset. Although no exemption was given on integrated GST that is levied on imports.

Has RBI stepped up buying gold?

ICICI Direct, in a report in April 2024 said that the RBI has been increasing its gold reserves for a few years now. In the last few quarters, the increase in gold reserves has risen significantly, the report said.

Also read: RBI buys net $13.25 billion in spot forex market in March: Bulletin

“One of the prime reasons for this is the decline in confidence in dollar assets among central banks. Even the US Treasury Department data suggest that the non-US central banks' holdings of US Treasury bonds have dropped from 50.1 percent (of what?) in January 2023 to 47.2 percent as of January 2024,” the report said.