Previous Year Question
“Gold Tranche” (Reserve Tranche) refers to:
a loan system of the World Bank
one of the operations of a Central Bank
a credit system granted by the WTO to its members
a credit system granted by the IMF to its members
Correct Answer: D
Detailed Solution
“Gold Tranche” is an older IMF expression now generally known as the Reserve Tranche Position (RTP). It represents a member country’s readily available and liquid claim on the IMF.
When a country becomes a member of the IMF, it must subscribe to an assigned quota. Traditionally, approximately:
25% of the quota is paid in SDRs or freely usable foreign currency; and
the remainder is paid in the member’s domestic currency.
The reserve-asset or foreign-currency portion was historically called the Gold Tranche because, under the IMF’s original arrangements, this portion was paid in gold.
The Reserve Tranche Position is broadly based on:
Member’s IMF quota − IMF’s adjusted holdings of the member’s currency
If the IMF uses a country’s domestic currency to finance another member, the IMF’s holdings of that currency decline and the first country’s Reserve Tranche Position increases.
A member may use its Reserve Tranche Position to meet a Balance of Payments requirement. Its main characteristics are:
It is counted as part of the member’s official foreign-exchange reserves.
Its use is not subject to the policy conditionality ordinarily attached to an IMF loan.
It is not an ordinary loan from the IMF but the member’s own liquid claim on the IMF.
Its use is not treated in the same manner as outstanding IMF credit.
Current position (2026)
The Reserve Tranche mechanism continues to operate within the IMF’s General Resources Account. The IMF’s 2026 Article IV document for India reported:
India’s IMF quota: SDR 8,736.50 million
Reserve Tranche Position: SDR 2,258.24 million
RTP equivalent to approximately 25.85% of India’s quota
Thus, the Gold Tranche mechanism has not been abolished; its current official terminology is Reserve Tranche Position.