Gold reserves with RBI surged over 12 times in 20 years: Govt data – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/economy/gold-reserves-with-rbi-surged-over-12-times-in-20-years-govt-data/article35562643.ece

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Around ₹50,000 crore lying as unclaimed deposit with banks, insurance companies

Gold reserves with the Reserve Bank of India surged over 12 times in 20 years, data presented by the Finance Ministry in Rajya Sabha on Tuesday showed. The Ministry also informed the Upper House that around ₹50,000 crore was lying as unclaimed deposit with banks and insurance companies.

NPA management

In a written response, Finance Minister Nirmala Sitharaman said that as a result of transparent recognition of stressed asset as non-performing assets (NPA), gross NPA (as a percentage of advances) rose to 14.58 per cent at the end of FY 2017-18 from 4.97 per cent of FY 2014-15. Then, with the strategy of 4Rs (recognition, resolution, recapitalisation and reforms), gross NPA declined to 9.11 per cent as on March 31, 2021.

Should India pile its reserves with gold?

Talking about recovery, she said: “PSBs have effected total recovery of ₹5,49,327 crore in NPA accounts and written-off loans since FY 2014-15 to FY 2020-21.” Data shows banks wrote off around ₹1.31 lakh crore during FY21 from ₹1.75 lakh crore during FY20. The government has repeatedly clarified that written-off does not mean no recovery. This is an account done to keep the balance sheet clean, avail the tax benefit and optimise capital.

Return optimisation

In a written response, Pankaj Chaudhary, Minister of State for Finance, said that the RBI has been in possession of gold reserves, as a part of the foreign exchange reserves. “While safety and liquidity constitute the twin objectives of foreign exchange reserves management, return optimisation is kept in view within this framework,” he said. Quoting information provided by the central bank, he said that gold reserves surged to $33,880 million at the end of FY 2020-21 from $2,725 million in FY 2000-01.

India added 42.3 tonnes gold to its reserves in FY21

He also mentioned that as part of the reserves management policy and as a means of raising resources, the RBI, in July 1991, pledged 46.91 tonnes of gold with the Bank of Japan and the Bank of England and raised a loan of $405 million. This loan was redeemed by the RBI by repayment between September and November 1991.

Unclaimed amounts

Meanwhile, Bhagwat Karad, another Minister of State in Finance Ministry, said in a written reply that as per information received from the RBI, the total amount of unclaimed deposits of Scheduled Commercial Banks (SCBs) was ₹24,356 crore, as on December 31, 2020. Similarly, based on information received from the Insurance Regulatory and Development Authority of India (IRDAI), the total amount of unclaimed amounts of policyholders in public and private sector insurance companies was ₹24,586 crore, as on December 31, 2020.

Talking about utilisation, he said that based on the amendment of the Banking Regulation Act, 1949, and insertion of section 26A, the RBI framed the Depositor Education and Awareness Fund (DEAF) Scheme in 2014. Unclaimed amounts lying with banks are credited to the DEAF by banks and subsequently utilised for promotion of depositors’ interest and for such other purposes necessary for promotion of depositors’ interest as may be specified by the RBI. All insurers having unclaimed amounts of policyholders for a period of more than 10 years need to transfer such fund to the Senior Citizens’ Welfare Fund (SCWF) every year. The SCWF is utilised for schemes to promote the welfare of senior citizens.

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