PYQ 2013 Q25 · RaahUPSC PYQ

2013 · EconomyPrevious Year Question

Q25.

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

Explanation

Open Market Operations (OMO) refers to the purchase and sale of government securities by the RBI in the open market to regulate money supply. The repo and reverse repo rates are used when RBI purchases or sells the government securities through this route.