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Bank Rate and Repo Rate

Buying and se...

Question

Buying and selling of eligible securities in the bill market by the RBI is called __________.

A

CRR

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B

SLR

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C

OMO

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D

Bank Rate

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Solution

The correct option is B OMO
Open market operation (OMO) is a monetary policy by the central bank in which the bank deals in the sale and purchase of securities in the open market to control the supply of money in the economy. By selling the securities, the central bank soaks liquidity from the economy and by buying the securities, the central bank releases liquidity.

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