Bank interviews are basically based on six areas.
- Your C.V.
- About your academic qualification.
- Bank Terms
- GK (Current Affairs)
- Computers (Basics)
- Current Recruitment (if any).
- Bio-data: About your family, About your town, About your studies, About your achievements, About your father’s working department, About your hobby, and any past work experience if you have.
- Academic qualification. : Candidate must have complete knowledge of the subject what he has studied. Any question can be asked in the subject. Prepare your subject especially basics.
- Bank Terms: If you are going for bank interviews basic banking knowledge is necessary. The following basic banking terms will help the candidate.
- GK: Be thorough with current affairs from past three months. Recent awards, Major issues, Sports related questions, State Governors and Chief ministers, Countries, Capitals, Currencies etc..,.
- Computers: Be thorough with basic computer terminology. Example: What is DOS, What is WWW, What is LAN, etc.. If you have any certificate, it will be an added advantage to the candidate.
- Current Recruitment (if any): If you are employed anywhere, you must be asked about that organization.
Interview Questions for Banking
1. What is Bank? Ans. Bank is financial institution which accepts deposits from the public for the purpose of lending.
2. Types of banks? Ans. Nationalized banks, Private Banks, Foreign banks, Regional rural banks, Co-operative banks, Industrial banks etc..
3. What is a nationalized bank? Ans: Banks which are owned and run by government of India are called as nationalized banks. Example: Canara bank, syndicate bank, Vijaya bank, etc.., There are total 21 nationalized banks at present. Bhartiya Mahila Bank is a new nationalized bank which starts operation in November. Private bank: Banks which are owned and run by individuals are called private banks. Example: karnataka bank, karurvysya bank, lakshmivilas bank etc.. Foreign banks: Banks which are foreign originated [based] are called foreign banks Example: Citi bank, HSBC bank.
4. What is RBI [Reserve Bank of India], when it is established and what are its functions? Ans: RBI established in 1935 and Nationalized in 1949 and its head office in Mumbai. Present Governor of RBI “ Raghuram Rajan”. Its functions:
- Issues currency notes
- Acts as bankers bank
- Maintains foreign exchange reserves
- Maintains CRR and SLR
Note: RBI is also called as “bankers bank”, because all banks will have a/c’s with RBI. It provides funds to all banks hence it is called as BANKERS BANK.
5. What are the Open Market Operations (OMOs)? Ans: OMOs are the market operations conducted by the Reserve Bank of India by way of sale/ purchase of Government securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. For Ex: When the RBI feels there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity. Similarly, when the liquidity conditions are tight, the RBI will buy securities from the market, thereby releasing liquidity into the market.
6. What is RRB’S (regional rural banks)? Ans. Regional Rural Banks are the banking organizations being operated in different states of India. They have been created to serve the rural areas with banking and financial services. Share capital in RRB’s: Central government: 50%, Sponsored bank: 35%, State government: 15% Prathama Bank is the first Regional Rural Bank of India, sponsored by Syndicate Bank established on 2nd October, 1975, with its Head Office at Moradabad RRBs works under supervision of NABARD (National Bank for Agriculture and Rural Development). NABARD head office is at MUMBAI. Note: Example of RRB’S: Prathma Gramin Bank, Pragathi Gramin bank etc. Every Gramin bank is sponsored by its nationalized bank. Example: Pragathi grameena bank is sponsored by “Canara bank”.
7. What are Co-operative banks? Ans. The main purpose of co-operative banks is to co-operate small scale industries, and to provide small loans. Example: Bellary dist co-op bank etc.
8. What are Industrial banks? Ans. The main purpose of industrial banks is to provide big loans to large scale industries. Examples: IDBI bank, Industrial bank of India etc.
9. Types of accounts in banks? Ans. Savings bank account [SB a/c]: The main purpose of SB a/c is to encourage small savings from the public. Interest paid on SB a/c is 4 percent. Any individual can open SB a/c. An Indian residing at abroad can open a NRI a/c. NRI represents non-resident Indians. Current account: It’s a running and active account. No interest is paid on current a/c. Current accounts can be opened on firm names. Even individuals can also open current a/cs. But on firm names you cannot open SB a/c. Fixed Deposit account: Amount is kept for a fixed period. Higher rate of interest will be paid on this a/c. Recurring deposit [RD a/c]: A fixed amount can be deposited in monthly installments. Interest rate is same as fixed deposits.
10. What is Unclaimed Deposit Account? Ans: Those saving or current accounts which have not been operated upon for 10 years or more, as at the end of each calendar year.
11. What is Inoperative /Dormant Account? Ans: A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years. The following services are not available for inactive / inoperative accounts:
- Request for address change
- ATM/Debit card renewal or issue
- Request for cheque book
- Transactions through ATM/Debit card, Internet Banking and Phone banking
- Transactions through issue of Clearing Cheque (applicable only for accounts in “Inoperative” status)
12. What is BSBDA Account (BASIC SAVING BANK DEPOSIT): Under the guidelines issued on August 10, 2012 by RBI: Any individual, including poor or those from weaker section of the society, can open zero balance account in any bank. BSBDA guidelines are applicable to “all scheduled commercial banks in India, including foreign banks having branches in India”. All the accounts opened earlier as ‘no-frills’ account should be renamed as BSBDA. Banks are required to convert the existing ‘no-frills’ accounts’ into ‘Basic Savings Bank Deposit Accounts’. The ‘Basic Savings Bank Deposit Account’ should be considered as a normal banking service available to all customers, through branches. The aim of introducing ‘Basic Savings Bank Deposit Account’ is very much part of the efforts of RBI for furthering Financial Inclusion objectives.
13. What is Cheque? Ans. Cheque is a negotiable instrument containing conditional order to pay sum of money to the person mentioned on it or to the bearer of the instrument.
- Crossing on Cheque: Two parallel lines drawn on the top left corner of the cheque.
- Account payee cheque: Account payee cheques can be routed only through accounts.
- Post dated cheque: The date on the cheque beyond today’s date then cheque becomes post dated.
- Stale cheque: Cheque is valid for 3 months. If the date on the cheque is before 3 months, then the cheque becomes stale cheque.
- Mutilated cheque: It is a damaged cheque.
- At Par cheque: It is payable anywhere in India.
- Multi city cheque: A cheque which is payable in any branch of a particular bank.
14. What is Demand Draft: Ans. A demand draft is an instrument used for effecting transfer of money. It is a negotiable instrument.
Difference b/w a Cheque and a demand draft:
- A cheque is issued by an individual whereas a demand draft is issued by a bank.
- A cheque is drawn by an account holder of a bank, whereas a draft is drawn by one branch of a bank on another branch of the same bank.
- In a cheque, the drawer and the drawee are different persons. But in a draft both the drawer and the drawee are the same bank.
- A cheque is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has not be precisely defined in the NI Act.
- A Cheque can be dishonored for want of sufficient balance in the account. Whereas a draft cannot be dishonoured. Hence there is certainty of the payment in the case of a demand draft.
- Payment of a cheque can be stopped by the drawer of the cheque, whereas, the payment of a draft cannot be stopped.
- A cheque can be made payable either to a bearer or order. But a demand draft is always payable to order of a certain person.
15. What is Cheque Truncation?
- Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch.
- In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
- Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole.
16. What is Repo rate? Ans. The rate at which RBI lends money to commercial banks is known as Repo Rate. Repo Rate at present: 7.75% Reverse Repo rate: Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country. Reverse Repo rate: 6.75%
17. What is Inflation? Ans. It is a state where money looses the value hence prices will go up (or) Decreasing the value of money.
18. What is Deflation? Ans. It is opposite to inflation. Money will have more value. Here the products looses the value.
19. What is Credit card? Ans. Credit card is a plastic instrument that can be used for the purchase of goods and services. You can buy the services and then pay the cash to the bank. Limits will be fixed based on the net worth of the customer. Leading credit cards: VISA, MASTER.
20. What is NPA? Ans. NPA: Non Performing Asset: When a loan becomes bad then it becomes NPA.
21. What is online banking? Ans. Nothing but any where banking. A customer can operate his account from any branch of a particular bank.
22. What is a currency chest? Ans.
- To facilitate the distribution of banknotes and rupee coins, the Reserve Bank has authorised select branches of scheduled banks to establish Currency Chests.
- These are actually storehouses where banknotes and rupee coins are stocked on behalf of the Reserve Bank. As on June 30, 2006, there were 4428 Currency Chests and 4102 Small Coin Depots.
- The currency chest branches are expected to distribute banknotes and rupee coins to other bank branches in their area of operation.
23. What is Online or Internet Banking? Ans. The accessing of bank information, accounts and transactions with the help of a computer through the financial institution’s website on the Internet is called online banking. It is also called Internet banking or e-banking
24. What are soiled, mutilated and imperfect banknotes? Ans.
- “soiled note:” means a note which, has become dirty due to usage and also includes a two piece note pasted together wherein both the pieces presented belong to the same note, and form the entire note.
- Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces.
- Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.
25. What is Bhartiya Mahila Bank (BMB) Ans. It is an Indian financial services banking company based in New Delhi, India.India’s Prime Minister Manmohan Singh inaugurated the system on 19 November 2013 on the occasion of the 94th birth anniversary of former Indian Prime Minister Indira Gandhi. Headquarter – New Delhi. Bank will get an initial capital of Rs 1,000 crore. Usha Ananthasubramanian – The First CEO/Chairperson of Bhartiya Mahila Bank
26. Financial inclusion: Financial inclusion means providing sound and affordable financial services to the “unbanked”, those who do not have access to the formal financial system. Financial inclusion is more than an economic issue – it is a legal and regulatory reform process.
27. What is Bancassurance: The sale of insurance and other similar products through a bank. This can help the consumer in some situations; for example, when a bank requires life insurance for those receiving a mortgage loan the consumer could purchase the insurance directly from the bank.
28. What is IFSC (Indian Financial System Code)? Ans.
- Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system.
- This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero).and the last 6 characters representing the bank branch.
- IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.
29. What is MICR ? Ans. It stands for Magnetic Ink Character Recognition. MICR Code is a numeric code which uniquely identifies a bank branch participating in the ECS Credit scheme. MICR code consists of 9 digits e.g 400229128
- First 3 digits represent the city (400)
- Next 3 digits represent the bank (229)
- Last 3 digits represent the branch (128) The MICR Code allotted to a bank branch is printed on the MICR band of cheque leaves issued by bank branches.
30. What is Balance Sheet? Ans. A financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must allow the following formula: Assets = Liabilities + Shareholders’ Equity
31. What is Fiscal Deficit? Ans. A deficit in the government budget of a country and represents the excess of expenditure over income. So this is the amount of borrowed funds require by the government to meet its expenditures completely.
32. What is Direct & Indirect Tax? Ans. A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an examples of direct tax. They are not shifted to somebody else. Indirect Tax: This type of tax is not paid by someone to the authorities and it is actually passed on to the other in the form of increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment tax are indirect taxes.
33. SDR (Special Drawing Rights)? Ans. SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained as accounting entries and not as hard currency or physical assets like Gold.
34. What is CRAR(Capital to Risk Weighted Assets Ratio)? Ans. Capital to risk weighted assets ratio is arrived at by dividing the capital of the bank with aggregated risk weighted assets for credit risk, market risk and operational risk.
35. What is Government Bonds? Ans: A government bond, which is also known as a government security, is basically any security that is held with the government and has the highest possible rate of interest.
36. What is FDI & FII? Ans. FDI: Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. FII: Foreign institutional investors (FIIs) are those institutional investors which invest in the assets belonging to a different country other than that where these organizations are based. Note: Foreign institutional investors play a very important role in any economy. These are the big companies such as investment banks, mutual funds etc, who invest considerable amount of money in the Indian markets. With the buying of securities by these big players, markets trend to move upward and vice-versa. They exert strong influence on the total inflows coming into the economy.
Difference b/w FDI & FII:
- FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.
- In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation.
- FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy.
- The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs.
- While the FDI flows into the primary market, the FII flows into secondary market. While FIIs are short-term investments, the FDI’s are long term.
37. What is Basel Norms ? Ans. Bureau of International Settlement (BIS) headquarters at Basel, Switzerland has appointed a committee to supervise and to set some standards for International Banks. This committee is known as Basel Committee on Bank Supervision (BCBS). The rules and regulations for Banks issued by this committee were called Basel Norms / Accords. There are three Basel Norms, namely Basel I, II and III.
Basel I Accord : This was issued in 1988. This accord focused on the capital adequacy of financial institutions. Banks that operate internationally are required to have a risk weight of 8% or less. India adopted Basel I Norms in the year 1999. Basel II Acord : This is the second of the Basel Accords, published in the year 2004. This consists of the recommendations on Banking Laws and Regulations issued by BCBS. Basel III Accord : Basel III guidelines were released in the year 2010. This is to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents and seeks to improve the banking sector’s ability to deal with financial and economic stress, improve risk management and strengthen the banks’ transparency.