5. When liquidity is more, the govt. can borrow at lower yields. Otherwise borrowing will become expensive When liquidity is good, interest rates are lower which helps corporates borrow at cheaper rates Govt. Borrowings Corporates When the RBI wishes to infuse liquidity into the market, it buys back the bonds that are with the investors G o v t . B o n d s G o v t . B o n d s G o v t . B o n d s G o v t . B o n d s C o r p . B o n d s C o r p . B o n d s C o r p . B o n d s C o r p . B o n d s B o n d s B o n d s B o n d s B o n d s
![[object Object],[object Object],If one were to read articles in ET on monetary policy and macro-economic development, one often comes across a term called ‘OMO’.](https://image.slidesharecdn.com/openmarketoperations-111110042648-phpapp02/85/Open-market-operations-1-320.jpg)
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