Correct Option (c)
Capital Account Convertibility (CAC) signifies the freedom to convert domestic financial assets into foreign financial assets and vice versa without restrictions. This allows residents and non-residents to freely invest, borrow, or transact in foreign capital markets. It pertains to cross-border movement of capital for investment purposes, such as buying foreign stocks, bonds, or real estate, or taking foreign loans.
Incorrect Options:
Option (a):
The exchange of Indian Rupee for travel purposes falls under Current Account Convertibility. The current account deals with transactions related to trade in goods and services, remittances, and income flows.
Option (b):
The exchange of Indian Rupee for any major currency for the purpose of trade in goods and services is also a component of Current Account Convertibility. These transactions represent short-term, recurring economic activities rather than long-term capital movements.
Option (d):
Option (c) accurately defines Capital Account Convertibility, rendering this option incorrect.