Purchase or sale of government securities by the central bank (RBI) to the general public is called open market operations.

In order to reduce the supply of money RBI will start selling government securities. Those who buy make payments by cheques. This reduces deposits with banks and this in tum reduces deposits with banks and this in turn reduces credit creation by banks. Thus money supply is reduced.

Detailed Answer:

Open Market Operations: Open market operations refers to sale and purchase of securities by the Central Bank in the open market. To increase money supply (as during deflation) securities are Purchased by the central bank. On the other hand, to decrease money supply (as during inflation) securities are sold off. By buying the securities, the central bank releases liquidity and hence, a rise in capacity to create credit of the commercial banks. By selling the securities, liquidity is sucked from the economy and hence, a reduction in capacity to create credit of the commercial banks.