As India celebrated Diwali — the festival of lights — the RBI informed the nation it has brought back more gold to country.
The RBI in its half-yearly report on Foreign exchange reserves revealed that its gold reserves had increased to 854.73 metric. Notably, the gold reserves has also increased in the domestic storage facilities.
Going by the report, around 214 tonnes of gold reserves were brought back to India since September 2022.
What does this mean?
Many central banks around the world prefer to store their gold reserves in foreign institutions. The reason for this is the lack of proper storage and security facilities.
For international storage of gold, central banks prefer the Bank of England and Bank of International Settlements, with RBI being no exception.
The RBI’s latest data shows that 510 metric tonnes of gold is held domestically in India. It is 60% of the total reserves before September’s end as compared to 50% in March, earlier this year. Between March and September, domestically held gold increased by 102 tonnes.
As of now around 324 metric tonnes of gold reserves of RBI is in safe custody of the Bank of England and the Bank for International Settlements.
Interestingly, just in May of this year, the RBI had announced of bringing back over 100 tons of gold reserves to its domestic secure facilities.
Why is it significant?
In financial markets, gold is considered a safe, liquid asset which performs well in times of crisis. A country with sizeable gold reserves shows a sign of stable market and economy.
As the entire globe is facing an economic crisis, India is repatriating its gold reserves which surely gives a message to investors around the world.
