RBI to Inject Rs 30,000 Crore into Market

Published on March 22, 2020
Current context: The Reserve Bank of India on 19th March 2020, has decided to infuse additional liquidity of Rs 30,000 crore into the market amid the Covid-19 pandemic.
RBI to Inject Rs 30,000 Crore into Market
  • RBI has taken the decision to ensure that all market segments function normally with adequate liquidity and turnover.
  • Under this, RBI will conduct the purchase of government securities under open market operations (OMOs) for an aggregate amount of Rs 30,000 crore.
  • The OMOs will be conducted in two tranches of Rs 15,000 crore each in March (24th March and 30th March).
  • OMOs are money market tools to suck or inject liquidity into the system.
  • RBI resorts to sell government securities when there is enough liquidity in the market, to take out money supply and purchases the same when liquidity is needed in the market.

Question: 

Q.1 Which among the following is the correct statement about open market operations (OMOs) conducted by RBI?
  1. RBI resorts to sell government securities when there is enough liquidity in the market
  2. RBI sell the government securities to provide enough liquidity into the market
a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

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