CBSE Class 12-commerce Answered

The components of capital account of balance of payments are

1. Foreign investment which includes foreign direct investment (FDI) and foreign institutional investment (FII) by the residents of a nation in abroad or by the rest of the world in the domestic country.
2. Borrowings which includes commercial borrowing by the government or private sector from the rest of the world and external assistance to a nation or by a nation.
3. Official international reserve which includes the changes in gold and foreign exchange reserve with the Central bank.