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Question
As per the Reserve Bank of India (RBI) press report, dated 22nd June, 2022:
"Net Foreign Portfolio Investment (FPI) recorded an outflow of US $15.2 billion mainly from the equity market."
The above transaction will be recorded in the ______ account on ______ side of Balance of payments account of India.
Options
current, credit
capital, credit
current, debit
capital, debit
Solution
As per the Reserve Bank of India (RBI) press report, dated 22nd June, 2022:
"Net Foreign Portfolio Investment (FPI) recorded an outflow of US $15.2 billion mainly from the equity market."
The above transaction will be recorded in the capital account on debit side of Balance of payments account of India.
Explanation:
Foreign portfolio investment is a component of the BOP capital account since it affects a country's assets. While the outflow of foreign currency is noted as a debit (negative) item in the BOP. As a result, it decreases the country's capital account balance.
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