India not mulling over ‘swapping’ of gold reserves, says Economic Affairs Secretary

Amid fears of depleting foreign exchange reserves and foundering currency, several Indian media had reported chances of the government leasing out its official gold holdings to raise cash reserves. However, the country’s Economic Affairs department stated that for now India has no proposal to lease gold.
In 1991, when India faced balance of payment crisis, the country responded by securing an emergency loan of $2.2 billion from the International Monetary Fund (IMF) upon pledging 67 tons of the official gold reserves as collateral. The country’s apex banking body had to airlift 47 tons of gold to the Bank of England and the balance 20 tons to the Union Bank of Switzerland.
In the recently concluded India International Gold Convention-2013(IIGC-2013), David Gornall, Chairman, LMBA suggested the country could think over pledging its gold reserves for a swap which could generate short term funds to the extent of $23 billion. The statement shocked the participants. Later media citing unidentified finance ministry officials reported that the country may swap the 200 tons of gold remaining overseas, ready for sale.
However, the Economic Affairs Secretary, Arvind Mayaram in a text message clarified that the government is presently not considering raising cash loan by swapping the IMF-bought 200 tons gold for payable currency.
The country currently holds the world’s 11th largest gold reserves. According to World Gold Council (WGC) statistics dated July 2013, the official gold holdings by the country stand at 557.7 tons, constituting 8.6% of the national forex reserves.
Source: Bullion Bulletin

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