Open Market Operation (OMO)
- On 6th March 2025, the Reserve Bank decided to inject Rs. 1.9 lakh crore into the banking system through open market operations of government securities and USD/INR swaps.
- OMOs refer to a central bank selling or purchasing securities in the open market.
- It is a monetary policy tool to rein in inflation and money supply in the system.
- When the RBI feels that there is excess liquidity in the market, it resorts to the sale of government securities, thereby sucking out the rupee liquidity.
- Selling securities removes money from the system, raises interest rates, makes loans more expensive, ....
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