economics medium MCQ

What is the primary objective of Open Market Operations (OMOs) conducted by the RBI?

  1. To regulate the stock market
  2. To manage durable liquidity in the banking system
  3. To fix the exchange rate of the Rupee
  4. To distribute government subsidies

Answer: To manage durable liquidity in the banking system

OMOs involve the outright sale or purchase of government securities by the RBI. Selling securities absorbs permanent (durable) liquidity from the market, while buying them injects liquidity. It is a primary tool for signaling the monetary policy stance over the medium term.

Topic Banking - Monetary Tools
Exam Relevance Banking, SSC, UPSC
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