OPEN MARKET OPERATION: A monetary policy instrument which is used by the Reserve Bank mainly with a view to affect the reserve base of the banks and thereby the extent of monetary expansion. It also, in the process, helps to create and maintain a desired pattern of yield on government securities and to assist the government in raising resources from the capital market. Under the RBI Act, the RBI is authorised to purchase and sell the securities of the Union Government and State Governments of any maturity and the security specified by the Central Government on the recommendation of Bank's Central Board. Presently the RBI deals only in the securities issued by the Union Government. Open market operations are by way outright sale and purchase of securities through the Securities Department and repo and reverse repo transactions.
OUT SOURCING BY BANKS: Outsourcing involves using the service of a third party (either affiliated or external to the corporate entity) to perform activities on a continuing basis that would normally be undertaken by the bank itself. Third party or service provider refers to the entity that is undertaking the outsourced activity on behalf of the bank . The bank will have to ensure effective management of certain risks associated with outsourcing like strategic risk, reputation risk, compliance risk, operational risk, country risk, contractual risk, access risk, systemic risk, etc., so as to avoid damage to bank's business operation, reputation or profitability.
Off Balance Sheet Items: Those items which affect the financial position of a business concern, but do not appear in the Balance Sheet E.g. guarantees, letters of credit. The mention "off Balance Sheet items" is often found in Auditors Reports or Directors Reports.
OFF-SHORE BANKING UNITS: With a view to providing an internationally competitive and hassle-free environment for production for exports the Government of India introduced Special Economic Zones (SEZs). The Government of India also permitted to set up off-shore banking units in these zones. These units are virtually foreign branches of Indian banks but located in India. All banks operating in India authorised to deal in foreign exchange are allowed to open off-shore banking units. The Reserve bank grants exemption from Cash Reserve Ratio requirement to the parent bank in respect of these branches. Banks, however, have to keep Statutory Liquidity Ratio for the branches. The sources for raising foreign currency funds are external. Deployment of funds restricted to lending to units located in SEZs and SEZ developers. The branches are not allowed to deal in Indian rupee.
OFF-SITE MONITORING AND SURVEILLANCE (OSMOS): This system providing on-going monitoring of performance of banks was introduced in 1995 with the aim of assessing the financial position of banks between the periods of on-site inspection. Under this banks are required to submit periodical returns to the RBI incorporating data on assets, liabilities, interest rate and liquidity risk, off-balance sheet exposure etc. The exercise involves two-tier approaches (1) analysis of statistical reports and (2) routine discussions with management.
Offer for Sale: An offer to the public by, or on behalf of, the holders of securities already in issue.
Offer for Subscription: The offer of new securities to the public by the issuer or by someone on behalf of the issuer.
Online Banking: Banking through internet site of the bank which is made interactive.
Open-end (Mutual) Fund: There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.
Open Offer: An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.
Option: A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.
Oversubscribed: When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the publicâ€™s perception of the business potential of the IPO company.