gs1medium

In the context of Indian economy, ‘Open Market Operations’ refers to:

  1. A.borrowing by scheduled banks from the RBI
  2. B.lending by commercial banks to industry and trade
  3. C.purchase and sale of government securities by the RBI
  4. D.None of the above
▶ Answer & Explanation

Correct answer: C. purchase and sale of government securities by the RBI

Open Market Operations (OMO) is a key monetary policy tool used by the Reserve Bank of India (RBI) to manage liquidity in the economy. By purchasing government securities from the market, the RBI injects liquidity, and by selling securities, it withdraws liquidity. This directly influences the money supply and credit conditions, impacting interest rates.

Source: UPSC gs1 2013

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