Open market operations (OMO):

  1. act as a monetary tool of RBI
  2. are conducted for the sale or purchase of government securities 

  Which of the above statements is/are correct?

Answer: [C] Both 1 & 2

Both are correct statements
RBI conducts open market operations by selling government securities in order to maintain ample liquidity in the system.

This question is a part of GKToday's Integrated IAS General Studies Module