Q. Consider the following statements regarding Open Market Operations (OMOs):
1.It is the sale/purchase of government securities (G-Sec) to/from the market by RBI.
2.It is an effective qualitative policy tool of RBI.
Which of the statements given above is/are NOT correct?
Explanation: OMOs are conducted by the RBI via the sale/purchase of government securities (G-Sec) to/from the market with the primary aim of modulating rupee liquidity conditions in the market.
OMOs are an effective quantitative policy tool in the armory of the RBI, but are constrained by the stock of government securities available with it at a point in time.
Source: Ramesh Singh