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RBI announces special OMO of Rs 20,000 crore

  • IASbaba
  • August 27, 2020
  • 0
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RBI announces special OMO of Rs 20,000 crore

Part of: GS-Prelims and GS-III – Economy

In News:

  • The RBI will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of ₹20,000 crore in two tranches.
  • It involves purchasing government securities of longer maturities and selling equal amount of securities of shorter maturities.

Important value additions 

 Open market operations 

  • It is the sale and purchase of government securities and treasury bills by RBI. 
  • Objective: 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. 
  • It sells government securities to suck out liquidity from the system.
  • Under OMO, RBI does not directly deal with the public.

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