Home » UPSC IAS » In the context of Indian economy, ‘Open Market Operations’ refers to

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

June 1, 2025 by rawan239

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

This question was previously asked in

UPSC IAS – 2013

Download PDF Attempt Online

In the context of the Indian economy, ‘Open Market Operations’ (OMO) refers to the purchase and sale of government securities by the Reserve Bank of India (RBI) in the open market.

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).

OMO is a key instrument used by the RBI to influence interest rates and control inflation. Other monetary policy tools include the Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo Rate, Reverse Repo Rate, Bank Rate, and Marginal Standing Facility (MSF).

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