New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Which of the following constitute Capital Account?

    I. Foreign Loans II. Foreign Direct Investment III. Private Remittances IV. Portfolio Investment Select the correct answer using the code given below:
    A I, II and III Correct Answer Incorrect Answer
    B I, II and IV Correct Answer Incorrect Answer
    C II, III and IV Correct Answer Incorrect Answer
    D I, III and IV Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Capital Account is a sub-component under the Balance of Payments. It keeps a record of transactions of international nature which are concerned with altering either an Asset or Liability for the domestic country.  Foreign Loans, Foreign Direct Investment and Portfolio Investment form a component of the Capital Account as they are adding up to the existing liabilities of the country as they warrant a future repayment liability.

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