The Reserve Bank of India (RBI) has acquired 75.59 tonnes of gold in the last 12 months, boosting the gold reserves of the country significantly. Data from the Reserve Bank shows that the Central bank held 743.84 metric tonnes of gold as of September 2021, more than 11 per cent compared to 668.25 tonnes of the yellow metal held in September 2020.

The RBI’s gold holding has gone up by 125.6 tonnes in the last two years, making India the word’s ninth-largest holder of gold reserves.

While 451.54 metric tonnes of gold are` held overseas in safe custody with the Bank of England and the Bank for International Settlements (BIS), 292.30 tonnes of gold are held domestically, says the RBI’s Report on Management of Foreign Exchange Reserves. In value terms (USD), the share of gold in the total foreign exchange reserves increased marginally from about 5.87 per cent as at end-March 2021 to about 5.88 per cent as at end-September 2021.

Although gold no longer plays a direct role in the international monetary system, central banks and governments still hold extensive gold reserves to preserve national wealth and protect against economic instability. Central banks are buying gold at an ever-increasing pace. In 2018 alone, they purchased more gold than at any time since the end of the gold standard – and they have been net buyers for 11 straight years. “Today, gold is the third largest reserve asset globally, following US dollar- and euro-denominated assets. Moreover, gold is increasingly used as collateral in financial transactions, much like other high-quality, liquid assets such as government debt,” says the World Gold Council.