CURRENT AFFAIRS

Detailed explanation-1: -OMO purchases amounted to ₹2.99 lakh crore during 2018-19 – to infuse durable liquidity and manage the enduring liquidity impact of forex interventions.

Detailed explanation-2: -It peaked at 38.5 per cent in 1991 and has been reduced to less than a half (18 per cent as of March 2022) since the 1991 reforms. Banks have often maintained G-secs well above the statutory minimum, in line with their risk appetite and the evolving business cycle.

Detailed explanation-3: -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. When RBI buys a Government bond in the open market, it pays for it by giving a cheque.

Detailed explanation-4: -What is open market operations by RBI? Open Market Operations is the simultaneous sale and purchase of government securities and treasury bills by RBI. The objective of OMO is to regulate the money supply in the economy. RBI carries out the OMO through commercial banks and does not directly deal with the public.

Detailed explanation-5: -The Central Bank buys government securities with an aim to increase the money supply. Purchase of securities by the Central Bank leaves more money with the people. It also increases liquidity of the commercial banks to create more credit (in terms of demand deposits).