RBI Gets High Court Notice to Explain
Gold Deposits with Bank
By Dinesh Thite
Pune Mirror, Pune, India
Friday, May 4, 2012
A technocrat-turned-public interest litigant, Raghunath
Shankar Kelkar, has challenged
the Reserve Bank of India's move to deposit abroad 265.49 tonnes of
gold out of its total stock of 557.75 tonnes by filing a public interest litigation in the Bombay High Court and has demanded that the precious metal be brought back into the country according to
the provisions of the law.
Kelkar, 56, who
used to manufacture computers, has filed the petition as he found that
the move by the central bank contradicts
Section 33(5) of Reserve Bank of India Act of 1934, which stipulates that 85 per cent of
the bank's gold reserves should be kept
The Bombay High
Court bench, comprising
D.D. Sinha and V.K. Tahilramani, heard the petition recently. The court noted that no one appeared for the
RBI. The order stated,
"Considering the issue involved
in the present public interest
lititation, we grant one opportunity to the
RBI to put an appearance through
its lawyer on the next day of hearing
and assist the court."
Kelkar filed the petition
on March 1. He said that he had sent three
notices of the issue to the RBI, eliciting no reply. He has made the Government
of India another respondent in this case. Kelkar is an avid RBI watcher.
He read the 17th half yearly report of RBI on management of foreign
exchange reserves, in which
the bank has said,
"The Reserve Bank held 557.75 tonnes of gold, forming about 9.2 per cent of the total foreign exchange reserves. Of these 265.49 tonnes are held abroad in deposits or safe custody with the Bank of England and
the Bank for International Settlements."
He said that the RBI move was in violation of the legal
provision as the bank had
put 46 per cent of its gold reserves
out of the country.
The reason given for the action is that of safe
custody. "Does the
RBI mean that gold is unsafe in India? Does the RBI think that Indian
security forces are incapable of guarding the gold treasure of
the country?" Kelkar asked.
He raised a question in the petition:
"In case there is a war between
India and England in
future, will our gold held by Bank of England be safe?"
He has made three demands in the petition: that the RBI be ordered to transfer the gold reserves of
the country from the possession of the Bank of England and Bank for International Settlements
to its own possession within the country; that until the final disposal of the
case, the bank not be allowed to take any more gold out of the country; and that
a detailed report be filed as to which bank officers are responsible for the breach of
Section 33(5) of RBI Act.
The price of gold deposited outside the country is about Rs 80,000 crore. Kelkar is pleading
his case himself, instead of appointing a lawyer. Earlier, when he thought
that the country had suffered a loss of more than Rs 65,000 crore due to alleged mistakes of RBI regarding its market stabilisation scheme, he filed
public interest litigation
in the High Court in 2008.
His argument was that RBI lost Rs 65,065 crore in 2006-07 due to a fall in its valuation
of investments in foreign
exchange. The RBI had not taken
this loss to its profit and loss account and the central government
was also not accounting this in its accounts presented to the Parliament, he said. The petition was dismissed in 2009 on technical grounds, Kelkar said.