Open Market Operation is a monetary policy tool of the RBI.
Open Market Operations refers to buying and selling of eligible securities or first-class bills (govt. securities) by the RBI. Securities sold and purchased are government securities including bonds and treasury bills.
Buying of securities in the open market increases the supply of money. On the other hand, selling of securities reduces the volume of money with the public. To reduce the inflationary pressure, the RBI may sell securities in the open market.
