What are open market operations? What is their effect on availability of credit? OR Explain the open market operations method of credit control used by a Central Bank . OR How does central bank control credit creation by commercial banks through open market operations? OR Explain how open market operations are helpful in controlling credit creation.

Statutory Liquidity Ratio: The minimum percentage of deposits that banks are required to reserve in the form of&nbsp;liquid assets like cash, gold, and securities before offering credit facilities to customers. This percentage is decided by the central bank.
Repo Rate: The rate at which commercial banks borrow money from the Central bank of the country by keeping securities with it, in order to maintain liquidity.

Open market operations are defined as the buying and selling of government securities by the Central Bank from/to the public and commercial banks. The sale of securities by the central bank reduces the cash reserves of commercial banks. It affects the bank's ability to generate credit and ultimately decreases the money supply in the economy. The purchase of securities by the central bank increases the cash reserves of commercial banks and raises the bank's ability to give credit and ultimately increases the money supply in the economy.

The bank rate is the rate at which the central bank of a country lends money to commercial banks to meet their long-term needs. RBI has been actively using Bank rates to control credit. The bank rate has the same effect as that of the Repo rate, i.e. an increase in the Bank rate increases the cost of borrowings from the central bank, which leads to an increase in lending rates by commercial banks.