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Ratios and OMO

"Open Market ...

Question

"Open Market Operations" refers to:

A

Sale and purchase of bonds and securities by the commercial banks to the customers.

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B

Sale and purchase of bonds and securities to the commercial banks by the RBI.

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C

Sale and purchase of bonds and securities by the RBI to the government.

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D

None of the above

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Solution

The correct option is B
Sale and purchase of bonds and securities to the commercial banks by the RBI.

Open Market Operations means sale and purchase of bonds and securities to the commercial banks by the RBI.

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Similar questions

Q. Purchase or sale of government securities by the Central bank from the general public in the bond market, in a bid to increase or decrease the money supply in the economy is referred to as ________.

Q. Purchase of securities in the open market by the commercial banks reduces their credit crediting power.

Q. When the RBI makes open market operations by sale of securities the money supply in the banking system?

Which of the following statements is true or false?

a) Commercial banks can issue currency notes
b) Commercial banks sell and purchase securities on behalf of their customers

Q. Consider the following statements:
1) Liquidity Adjustment Facility operations help the RBI effectively transmit Interest rate signals to the market.
2) Under the repo or repurchase option, banks borrow money from the RBI via the sale of securities with an agreement to purchase the securities back at a fixed rate at a future date.
Which of the statement(s) given above is/are correct?

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