The Reserve Bank of India's (RBI) conduct of 'Open Market Operations' (OMO) is considered part of 'sterilization' because it involves the buying and selling of government securities to regulate the money supply and control inflation. When the RBI sells securities, it absorbs excess liquidity from the market, thereby counteracting the inflow of foreign capital that could otherwise lead to inflationary pressures. This mechanism is crucial for maintaining economic stability by balancing the effects of foreign exchange interventions on domestic monetary conditions.