India has "well dispersed" its foreign exchange (forex) reserves in different currencies and gold, Shaktikanta Das, governor, Reserve Bank of India (RBI) – the country's federal bank – said on 21 March, rejecting concerns expressed by several experts, including some industrialists, who were of the opinion that the RBI would be crippled if it were to face sanctions similar to those imposed on Russia by the US.
While making it clear that he does not foresee any such sanctions being imposed on India, Das did acknowledge that the action taken by the US has probably provoked every country to re-examine the composition of their forex reserves.
"We have gold reserves, which are also dispersed partly in India, partly outside. So it is quite diversified. And sanctions, we don't foresee that situation. But yes, it is something which going forward every country will start thinking about it", the governor said in an interaction with members of the Confederation of Indian Industry (CII).
Last month, Russia's military operation in Ukraine resulted in severe sanctions being imposed on the $1.7-trillion-economy, impacting transactions in most sectors except energy and pharma.
The US and European Union, besides imposing sanctions on political leaders and businessmen, have frozen the Central Bank's assets stashed in different parts of the world.
The West's decision has been dubbed an "economic war" by the Kremlin. It limits the Central Bank's ability to intervene in the currency market, where the ruble has recorded a drastic fall against the US dollar.
On Monday, Shaktikanta Das assured industrialists and concerned people about India's well-distributed forex reserves in many currencies.
"We decided to diversify our reserves to other currencies not now but six months back. So I don't think this (sanctions) is a major problem for us", Das underlined.
On 17 March, a former chief economist at the International Monetary Fund and ex-governor of the RBI said that fear of "indiscriminate sanctions" by the US could see China, India, and others limiting their holdings in the advanced economy.
"With few other assets possessing the liquidity of dollar or euro reserves, countries will start limiting activities that necessitate reserve holdings, such as cross-border corporate borrowing", Rajan noted.
India's forex reserves were $622.275 billion as of 11 March; most of this is in US dollars, while the value of gold reserves is $43.8 billion.