Q. Consider the following statements regarding “Open Market Operations”:
1.It is conducted by the department of financial services.
2.Individuals are not allowed to participate in this market.
Which of the statements given above is/are correct?
Answer: D
Notes:
Explanation: OMOs are conducted by the RBI via the sale/purchase of government securities (G-Sec) to/from the market with the primary aim of modulating rupee liquidity conditions in the market.
- OMOs are an effective quantitative policy tool in the armory of the RBI but are constrained by the stock of government securities available with it at a point in time.
- Other than the institutions, individuals will also be able to participate in this market.
Source: Ramesh Singh
