Match the open market operation of the RBI (List-I) with its effect (…

Match the open market operation of the RBI (List-I) with its effect (List-II):

List-I		List-II
(A)	Outright purchase of securities	(I)	Money is withdrawn from the system till the agreed date of repurchase
(B)	Purchase of securities under a repo	(II)	Money is withdrawn from the system permanently
(C)	Sale of securities under a reverse repo	(III)	Money is injected into the system permanently
(D)	Outright sale of securities	(IV)	Money is injected into the system till the agreed date of resale

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

A purchase of securities by the RBI injects money; a sale withdraws it. Outright deals are permanent; under a repo or reverse repo the deal is reversed on an agreed date.

List-I	List-II	Reason
(A) Outright purchase of securities	(III) Money is injected into the system permanently	There is no promise to sell the securities back.
(B) Purchase of securities under a repo	(IV) Money is injected into the system till the agreed date of resale	The RBI buys with an agreed date and price of resale.
(C) Sale of securities under a reverse repo	(I) Money is withdrawn from the system till the agreed date of repurchase	The RBI sells with an agreed date of repurchase.
(D) Outright sale of securities	(II) Money is withdrawn from the system permanently	There is no promise to buy the securities back.

NCERT (2026-27): “3.4 Policy Tools to Control Money Supply … There are two types of open market operations: outright and repo. Outright open market operations are permanent in nature: when the central bank buys these securities (thus injecting money into the system), it is without any promise to sell them later. Similarly, when the central bank sells these securities (thus withdrawing money from the system), it is without any promise to buy them later. As a result, the injection/absorption of the money is of permanent nature. However, there is another type of operation in which when the central bank buys the security, this agreement of purchase also has specification about date and price of resale of this security. This type of agreement is called a repurchase agreement or repo. The interest rate at which the money is lent in this way is called the repo rate. Similarly, instead of outright sale of securities the central bank may sell the securities through an agreement which has a specification about the date and price at which it will be repurchased. This type of agreement is called a reverse repurchase agreement or reverse repo. The rate at which the money is withdrawn in this manner is called the reverse repo rate.”