65%! India's gold reserves accelerate "returning home," domestic storage share doubles in four years

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The Reserve Bank of India is accelerating the process of repatriating its overseas gold reserves back to the country. Currently, over 65% of India’s gold reserves are stored domestically, nearly double the figure from four years ago.

In its semi-annual report on foreign exchange reserves released on Tuesday, the Reserve Bank of India (RBI) disclosed that nearly 64 tons of gold had been brought back during the first six months of this fiscal year (from April). As of the end of September, gold accounted for 13.92% of total foreign exchange reserves by value (in USD), up from 11.70% at the end of March.

Typically, the RBI stores part of its gold reserves with international financial institutions such as the Bank of England and the Bank for International Settlements. As of the end of September, the RBI held 880 tons of gold, with 576 tons stored domestically—a record high. In September 2022, only about 38% of India’s gold reserves were held within the country.

Although the RBI did not specify a reason for this adjustment, economists believe it is likely aimed at strengthening control over national gold assets. Over the past four years, the RBI has repatriated nearly 280 tons of gold. Last month, Finance Minister Nirmala Sitharaman said the RBI was making “very careful decisions” regarding diversification of reserves.

IndusInd Bank Chief Economist Gaurav Kapur said:

"Since we have the capacity to store it, why not bring it back? Many central banks are doing so. In these uncertain times, it makes sense to have gold in your own hands."

The RBI is also one of the world’s major buyers of gold, aiming to reduce reliance on the dollar and related assets. The bank has steadily reduced its holdings of US Treasuries, a process that began even before Trump imposed a 50% tariff on India for purchasing Russian oil.

Recently, spot gold prices have repeatedly hit all-time highs, rising over 50% so far this year, and are now at $4,026.7 per ounce.

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