Source: The Hindu
Context:
The Reserve Bank of India (RBI) conducted Open Market Operations (OMO) to purchase ₹50,000 crore worth of Government Securities (G-Secs) to ease liquidity in the banking system amid global economic uncertainty and rising oil prices.
What is an Open Market Operation (OMO)?
Open Market Operations are a monetary policy tool used by the RBI to regulate liquidity in the economy by buying or selling government securities in the open market.
- OMO Purchase: RBI buys government securities → increases liquidity in the banking system.
- OMO Sale: RBI sells government securities → absorbs excess liquidity.
Purpose of the OMO Purchase
The latest OMO purchase was undertaken to:
- Inject liquidity into the financial system.
- Stabilize bond yields and financial markets amid global uncertainty.
- Counter liquidity pressures arising from advance tax payments, GST outflows, and foreign exchange interventions.
