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Detailed explanation-1: -The Reserve Bank of India (RBI) on Monday announced that it will purchase government securities worth ₹20, 000 crore through open market operations (OMOs) in a bid to cap yields of treasury bonds and support an expanded government borrowing programme.

Detailed explanation-2: -Open market operation (OMO) is the process by which the central bank purchases (sells) government securities (G-secs) or other financial assets from (to) banks and financial institutions. In a modern market-based financial system, central banks use OMOs as one of the tools for implementing monetary policy.

Detailed explanation-3: -Thus, it can be said that open market operations have an impact on the deposits and reserves of the bank and also plays a role in their ability to provide credit. When a central bank wants to reduce the availability of money to the public, it will sell government bonds and securities with the help of commercial banks.

Detailed explanation-4: -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-5: -In open market operations, the Federal Reserve buys or sells securities on the open market to raise or lower interest rates. They are one of the tools that the Fed has at its disposal to boost or slow down the country’s economic activity.