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Question

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

(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by the RBI
(d) None of the above

Answer:

C

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Explanation:

In the context of the Indian economy, "Open Market Operations" refers to the purchase and sale of government securities by the Reserve Bank of India (RBI). The RBI conducts open market operations to regulate the money supply in the economy and manage liquidity conditions. When the RBI purchases government securities, it injects liquidity into the market, and when it sells government securities, it absorbs liquidity from the market. This tool is used by the RBI to influence short-term interest rates and stabilize the financial markets.

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