Open Market Operations in India

Open Market Operations (OMO) are one of the primary tools used by the RBI to control money supply and manage liquidity in the economy. OMO specifically refers to the purchase and sale of government securities (like Treasury bills and bonds) by the RBI in the open market. When the RBI buys securities, it injects money into the economy (expansionary policy); when it sells securities, it withdraws money (contractionary policy). Option (a) refers to repo operations, not OMO. Option (b) describes the normal lending business of commercial banks, not RBI operations. > OMO = RBI buying/selling government securities to manage money supply and interest rates.