In the context of Indian economy, ‘Open Market Operations’ refers to
borrowing by scheduled banks from the RBI
lending by commercial banks to industry and trade
purchase and sale of government securities by the RBI
None of the above
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2013
OMO is a quantitative monetary policy tool used by the central bank to manage liquidity in the economy. When the RBI buys government securities from the market, it injects liquidity (money supply increases). When it sells government securities, it absorbs liquidity (money supply decreases).