The document discusses the Reserve Bank of India's (RBI) Open Market Operations (OMO), which involve buying and selling government securities to manage rupee liquidity and influence short-term interest rates. It highlights the impact of these operations on inflation, corporate borrowing conditions, and the overall economy, particularly in the context of post-1991 economic reforms. The document notes that OMOs are employed by the RBI to control money supply, maintain inflation targets, and stabilize exchange rates.

1. By - Nischay
Dakshay
Antra
Mayur
Abhinandan
Mridula

2. Conducted by RBI
Buy/sell of government securities.
To adjust the rupee liquidity
conditions.

3. Reserve Bank of India
Commercial Banks
Financial Institutions

4. To manipulate the short term interest rate.
Control the supply of base money in an economy.

5. Outright Purchase (PEMO)
Repurchase Agreement (REPO)

6. PROCES
S

7.  Soften the Interest Rates.
 Fresh bonds can be issued at lower yields and Government can buy at reasonable
rates.
 Enables corporate to buy at favourable rates.
 It prevents rupee from strengthening unnecessarily and thus protects the
exporter.
 May tend to increase inflation.

8. Online
GSO Account

10.  After the 1991 economic reforms use of CRR and SLR tools
were de emphasized and the use of OMO increased.
 When they want to control the money supply in the market.
When there is excess or less of liquidity in the market.
 When the RBI wants to maintain an inflation rate within a
target range.
 When they want to target the specific short term interest
rates.
 When they want to achieve a fixed exchange rates with
relation to foreign currencies.