BANKING AFFAIRS

Detailed explanation-1: -Open market operations are the sale and purchase of government securities and treasury bills by RBI or the central bank of the country. These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.

Detailed explanation-2: -Open Market Operations refers to the buying and selling of Government securities in the open market. This purchase and sale are entrusted to the Central bank (RBI) on behalf of the Government.

Detailed explanation-3: -Open market operations are the buying and selling of government securities to alter the money supply.

Detailed explanation-4: -Open market operations (OMO) of RBI comprise outright sale and purchase of securities, Repo and Reverse Repo operations through LAF. While the outright OMO are directed at influencing enduring liquidity, the LAF OMO operations target the temporary liquidity in the system.

Detailed explanation-5: -LAF (Liquidity Adjustment Facility)-It is the tool used by the RBI that allows banks to borrow money through repo agreements or for banks to make loans to the RBI through reverse repo agreements. It consists of daily infusion or absorption of liquidity using government securities as collateral.