RBI announces special OMO of Rs 20,000 crore
Part of: GS-Prelims and GS-III – Economy
- 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.