UPSC CSE Prelims
Question 41
In the context of Indian economy, 'Open Market Operations' refers to
View correct answer and explanation
Correct answer: C
Correct Option: C
Explanation: Open Market Operations are RBI purchases and sales of government securities in the market to manage liquidity and monetary conditions.
Option-wise Analysis:
A: Incorrect - Wrong: scheduled-bank borrowing from RBI is a separate refinance/liquidity channel.
B: Incorrect - Wrong: ordinary commercial-bank lending to businesses is not an RBI OMO.
C: Correct - Correct: central-bank security purchases inject, and sales absorb, system liquidity.
D: Incorrect - Wrong: the RBI’s government-securities transactions are explicitly an OMO.