Consider the following:
1. Loans taken by Indian companies from foreign banks.
2. Foreign Direct Investment (FDI) in Indian businesses.
3. Line of credit extended to India by foreign entities.

Which of the above transactions are recorded under the capital account of India's Balance of Payments?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question

Consider the following:
1. Loans taken by Indian companies from foreign banks.
2. Foreign Direct Investment (FDI) in Indian businesses.
3. Line of credit extended to India by foreign entities.

Which of the above transactions are recorded under the capital account of India's Balance of Payments?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

ONLiNE UPSC · Accepted Answer

Loans taken by Indian companies from foreign banks: Borrowings from foreign banks are a part of external commercial borrowings (ECBs) and are recorded in the capital account.

Foreign Direct Investment (FDI) in Indian businesses: FDI involves foreign capital inflows into Indian companies, making it a capital account transaction.
Line of credit extended to India by foreign entities: A line of credit (LoC) is essentially a loan facility provided by foreign entities, which involves a transfer of capital and is thus recorded under the capital account.

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E Question 1	⏱ 0
Consider the following: 1. Loans taken by Indian companies from foreign banks. 2. Foreign Direct Investment (FDI) in Indian businesses. 3. Line of credit extended to India by foreign entities. Which of the above transactions are recorded under the capital account of India's Balance of Payments? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3