The Reserve Bank of India (RBI) has transferred more than 100 tonnes of gold from the UK to its domestic vaults for the first time since 1991. According to The Times of India, another similar shipment of gold may be sent to the country in the coming months.
By the start of the new financial year, RBI had 822.1 tonnes of gold, of which 413.8 tonnes were stored overseas. During the last financial year the bank acquired 27.5 tonnes of the precious metal.
The Bank of England has served as a repository for India's gold reserves since colonial times. “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 media quoted an official as saying.
For many Indians, gold holds a lot of emotional significance, especially after the Chandra Shekhar government decided to hoard the precious metal in 1991 to overcome the balance of payments crisis. RBI had purchased 200 tons of gold from the International Monetary Fund (IMF) about 15 years ago. In recent years, there has been a consistent accumulation of gold reserves through acquisitions by the Indian central bank.
RBI got a customs duty exemption on gold imports, with the government ‘foregoing revenue’ on what is a sovereign asset. However, integrated Goods and Services Tax (GST) levied on imports and shared with the states, was not exempted. A special aircraft was required to transport the substantial amount of gold, accompanied by comprehensive security measures.
The move is said to allow the central bank to reduce some of the costs of storing gold at the Bank of England. In India, gold is stored in vaults in Mumbai (in the RBI’s former office building) and Nagpur.
Hélène Tarin, Editor in Chief of the Asian Bureau, Rough&Polished
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