During FY22, the RBI added 61.6 metric tonnes (MT) of gold, due to which its total yellow metal holdings increased to 760MT. The addition of gold, coupled with the increase in value of the yellow metal, resulted in the value of gold reserves rising 37% from Rs 1.43 lakh crore as of March 2021 to Rs 1.96 lakh crore by end March this year.
In its annual report for FY22, the RBI said that it had taken up diversification of reserves while adhering to the primary objectives of safety and liquidity. It also scaled up newly introduced foreign currency assets products during the year.
Foreign currency assets (FCA) of the RBI include deposits with central banks, the Bank for International Settlements (BIS) & commercial banks overseas, investments in foreign T-Bills & securities, and special drawing rights (SDRs) with the IMF.
In the wake of the West freezing Russia’s foreign exchange reserves, RBI governor Shaktikanta Das had said that while he did not foresee a situation where India would face sanctions, every country would have to think about diversification.
According to data on weekly variation in foreign exchange reserves, separately released by the RBI on Friday, India’s forex reserves increased by $4.2 billion to $597.5 billion during the week ended May 20.
The increase was largely because of an increase in foreign currency assets (FCA), which rose $3.8 billion to $533 billion during the week. Gold reserves increased by $253 million to $40.8 billion. The increase in forex reserves considers the appreciation in the value of non-dollar currency assets.
The RBI reiterated its plans for a central bank digital currency (CBDC) which would be in conformity with its objectives of monetary policy, financial stability and efficient operations of currency and payment systems. “The RBI proposes to adopt a graded system to introduction of CBDC, going step by step through stages of proof of concept, pilots and the launch,” the RBI said. Earlier, the central bank had said that one of the objectives of the CBDC was to counter the risk of dollarisation posed by stablecoins — cryptocurrencies with dollars as underlying assets.
The RBI was also going for cross-border pacts so that the outreach of India’s payment systems, such as UPI, could be extended beyond India’s borders. “To facilitate cheaper cross-border payments, in September 2021, the RBI and the Monetary Authority of Singapore announced a project to link their fast payment systems, viz, Unified Payments Interface and PayNow,” the RBI said.