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- The Reserve Bank has said it will inject Rs 15,000 crore into the financial system through purchase of government bonds via the auction route.The government securities will be bought under Open Market Operations (OMO).
- This decision was taken as financial sector has been facing liquidity crisis ever since the Infrastructure Leasing and Financial Services Ltd (IL&FS) had defaulted in its payment obligations triggering reluctance among lenders to lend to the Non Banking Financial Company (NBFC) sector.
- Open market operations is the sale and purchase of government securities and treasury bills by the Reserve Bank of India(RBI).
- The objective of OMO is to regulate the money supply in the economy.When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
- RBI carries out the OMO through commercial banks and does not directly deal with the public.OMO is one of the tools that RBI uses to smoothen the liquidity conditions through the year and minimise its impact on the interest rate and inflation rate levels.




