The Reserve Bank of India (RBI) on Wednesday said it has sought quotes from banks to swap gold in its own vaults for international standard gold, in a "locational swap" designed to optimise the management of its reserves.
As a result of the arrangement, and subject to government approval, the RBI would release some relatively impure gold stocks onto the local market, helping to ease supply shortages arising from import curbs.
The apex bank said the operation would "standardise the gold available with RBI in India with respect to international standards like London Good Delivery" and the gold acquired would be delivered to its overseas custodian, the Bank of England.
Under the leadership of Governor Raghuram Rajan, appointed last year, the RBI has sought to modernise its market operations and improve the management of gold and foreign currency reserves that are worth a total of around $315 billion.
According to the World Gold Council, India holds the 11th-largest gold reserves of 557 tonnes. At current market prices, they would be worth nearly $24 billion. It was not immediately clear how much of that would be swapped.
The RBI had sounded out bankers on a plan to swap some of the old, relatively impure, gold that has been lying in its vaults since before independence in 1947, a newspaper reported earlier.
"RBI, in consultation with the government, would decide further in regard to quantity, swap-ratio, timing etc. of the gold to be swapped," the RBI said in an emailed response to questions from Reuters.
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