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Category — GS Paper 3 ///Published — 2026-05-06 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 3 ///Category — GS Paper 3 ///Published — 2026-05-06 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 3 ///

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RBI's Strategic Gold Repatriation: A Geopolitical Shift

RBI has repatriated 168.06 MT of gold to domestic shores in 2025-26, marking the third consecutive year of large-scale transfers. As of March 2026, 77% of India's 880.52 MT gold reserves are held domestically, up from just 38% in March 2023. This strategic shift reflects India's response to global geopolitical uncertainties and the desire for asset diversification, with gold's share in forex reserves rising to 16.7%.

2026-05-06

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Background and Context

The Reserve Bank of India (RBI) has been progressively repatriating gold stored in international vaults, particularly from the Bank of England and the Bank for International Settlements (BIS). This trend began intensifying as India sought to reduce its historical reliance on London and New York vaults.

Key Statistics

Gold Repatriated in 2025-26: 168.06 MT (including 104.23 MT transferred in the second half)
Previous Years: 107.21 MT and 103.68 MT in the two preceding years
Total Gold Reserves: 880.52 MT (as of March 2026)
Domestic Holdings: 77% (up from 38% in March 2023)
Gold Remaining Abroad: Approximately 197.67 tonnes with Bank of England and BIS

Composition of India's Foreign Exchange Reserves

The foreign exchange reserves are composed of four distinct categories:

Foreign Currency Assets: ~80.0%
Gold Reserves: ~16.7% (increased from 11.7% in 2024-25)
Special Drawing Rights (SDRs): ~2.4%
Reserve Position in IMF: ~0.9%

Legal Framework

The RBI Act, 1934 outlines the types of foreign assets the RBI is permitted to buy and hold, including foreign government securities and deposits with foreign central banks.

Geopolitical Drivers

The repatriation drive gained momentum following the 2022 Russia-Ukraine conflict and the subsequent freezing of Russia's dollar reserves. This event prompted central banks worldwide to:

Favor "domestic storage" to avoid potential sanctions or asset freezes
Diversify reserves amid geopolitical uncertainties
Strengthen national asset control

Global Comparison

According to the World Gold Council, despite the increase in domestic gold storage, RBI's overall gold reserves grew by only 10% (86 MT) over the last three years. This contrasts with central banks like:

National Bank of Poland
Uzbekistan
China

These central banks purchased gold heavily in early 2026 to diversify reserves amid geopolitical conflicts.

Significance for India

Enhanced Sovereignty: Greater control over national assets
Risk Mitigation: Protection against potential international sanctions or asset freezes
Strategic Independence: Reduced dependency on Western financial infrastructure
Value Appreciation: Gold's share in forex reserves increased, benefiting from global price rallies