Open Market Operations(OMO)

▪️ It is the sale and purchase of government securities and treasury bills by RBI or the central bank of the country. 

▪️ Aim: To adjust the rupee liquidity conditions in the market on a durable basis. 

▪️ The central bank carries out the OMO through commercial banks and does not directly deal with the public. 

▪️When the RBI feels that there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity.  

▪️ Similarly, when the liquidity conditions are tight, RBI may buy securities from the market thereby releasing liquidity into the market.