Earlier, the RBI divided the BoP transactions into two accounts, current account and capital account. However, one new account has been added by RBI following  the new accounting standards introduced by the International Monetary Fund. Identify the account.

Financial Account

The correct answer is option 2: Financial Account

The balance of payments accounts is traditionally divide the transactions into two accounts, current account and capital account. However, following the new accounting standards introduced by the International Monetary Fund in the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) the Reserve Bank of India also made changes in the structure of balance of payments accounts. According to the new classification, the transactions are divided into three accounts: current account, financial account and capital account. The most important change is that almost all the transactions arising on account of trade in financial assets such as bonds and equity shares are now placed in the financial account.