Blog on Banking Interview Questions and Answer
As you all know that Banking Interview is also a part of selection where the candidates can be rejected after clearing Pre and Main exams, so in this blog I have try to discuss some of the important questions related to various public sector and private sector banks, hope this will help you for upcoming SBI (State Bank Of India) and other nationalised Bank Interviews..
1) Define banks?
Answer: – A bank is defined as a financial institution licensed for receiver or accepts of cash deposits. Banks are regulated by the national government or central bank (RBI).
2) When RBI is established, where is its Headquarter and Explain Its Functions?
Answer: – In 1935 RBI (Reserve Bank of India) is established, its head office is in Mumbai Maharashtra. RBI is also called as “Banker’s Bank” because all banks will have accounts with RBI. It provides funds to all banks. Therefore, it is known as BANKERS BANK.
Its functions are as follows:
- i) Issues currency notes.
- ii) Acts as banker’s bank.
iii) Maintains foreign exchange reserves.
- iv) Maintains CRR (cash reserve ratio) and SLR (statutory Liquidity Ratio).
3) Explain investment banking and its Functions?
Answer: – Investment banking is defined as a special part of banking operation that helps individuals or organisations to increase the capital and provide financial services guidance to them. Corporate advisory services for mergers and acquisitions, fixed income, Management of financial assets, commodity and currency, corporate finance, debt and equity writing etc. are the functions of investment Banking.
4) What is commercial bank?
Answer: – Commercial bank offer services to individuals, they are primarily concerned with receiving deposits and lending to business. The money i.e. deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans etc. This bank earns money by imposing interest on the loan borrowed by the borrower.
5) What are the types of Banking?
Answer: – Types of banking are as follows:-
- i) Retail Banking.
- ii) Corporate or business banking
iii) Investment banking.
- iv) Universal banking.
- v) Rural banking.
vii) Foreign banking.
6) What is NPA?
Answer: – NPA stand for Non-performing Asset, when a borrower fails to make interest or principal payment in respect of a loan for 90 days it is considered as NPA (Non-performing Asset).
7) Where is Headquarters of SBI and its Tag Line?
Answer: – Headquarter of SBI is in Mumbai (Maharashtra) and its tag line is The Banker to Every Indian, With you all the way, Pure Banking Nothing Else, The nation’s banks on us.
8) What is ‘Crossed Cheque’?
Answer: – Two Cross-lines on the left side corner of the cheque indicates crossed cheque. In crossed cheque the amount should be deposited into the payees account and cannot be cashed by the bank over the counter.
9) Explain Bank Rate?
Answer: – Bank rate is defined as the rate of interest that is charged by the RBI on loans granted by it to banks and financial institution.
10) Explain the different types you can operate Bank accounts?
Answer: – Bank accounts can be operated as follows:-
- i) Internet banking.
- ii) Mobile banking.
- ii) Visiting Branch or counter service.
- iv) Automated Teller Machine (ATM).
11) What is Core Banking?
Answer: – In core banking, there is an arrangement within the bank branches where customers of a particular branch can operate their bank account and also manage their transactions through any branch of the concerned bank.
12) Explain Para Banking?
Answer: – Para Banking includes all the services provided by banks such as Debit cards, Credit cards, Life Insurance products, Cash Management services etc. Expect day to day banking functions.
13) Tells us name of Few “Poverty Eradication Schemes” introduce by Government of India?
Answer: – “Poverty Eradication Schemes” introduce by government of India is Rajiv Awas Yojana, Indira Gandhi Pension plan, Food Security bill, MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) ,Sarva Shiksha Abhiyan, Antyodaya Yojana, Swavalamban Yojana, Nirmal Gram Yojana etc.
14) What is overdraft protection? Is bank charge for ‘overdraft protection’ service?
Answer:- Overdraft protection is defined as a service that is provide by a bank to their customers who is having two accounts, saving and credit account, in the same bank. Now if one of your accounts does not have enough credit to process the cheques, or to cover the purchases. The bank will transfer money from one account to another account, which does not have credit to prevent check return or to clear bills. Yes, bank will charge only when we start using this service of Overdraft protection.
15) Explain function of Cooperative Banks?
Answer: The main function of cooperative banks is to provide small loans and to co-operate small scale industries.
16) Explain “Demand Draft And Cheque”?
Answer: Demand draft is a negotiable instrument always payable on order but a Cheque is a negotiable instrument which is paid to the bearer.
17) Define ‘cost of debt’?
Answer: ‘Cost of debt’ is defined as the rate of interest which a company pays on the amount they borrows from a financial institution /bank or any other resources.
18) Explain types of card based payments?
Answer: There are two types of card payments:-
- i) Credit Card
- ii) Debit Card
19) What is ‘Amortization’?
Answer: – The loan repayment by instalment to cover principal amount with interest is called as ‘Amortization’.
20) What is negative Amortization?
Answer: – The negative Amortization occurs when repayment of the loan is less than the loans accumulated interest, it will increase the loan amount instead of decreasing it. It is also known as ‘deferred interest’.
21) From where banks generate profit?
Answer: – Bank generate profit in following ways i.e.
- i) Banking value chain.
- ii) Deposit Acceptance.
iii) Providing funds to borrowers on interest.
- iv) Additional charges on services like checking account maintenance, ATM transaction,
Online bill payment.
22) Explain Promissory Notes?
Answer: – Promissory notes is a money market instrument where one party promise to pay in writing a certain sum of money to another party at a future date under a specific terms.
Example: – promissory note is a bank note or the currency note through which we purchase goods and services.
23) Explain Features of Promissory Notes?
Answer: – Features of Promissory notes are as follows:-
- i) Promissory note is always a written instrument.
- ii) Promissory note is signed by the maker.
iii) Promissory notes is a un conditional instrument, if the instrument is conditional it is not promissory note.
- iv) Promissory note is either payable on demand or at a fixed period of time.
- v) The amount mentioned in the Promissory note is certain and definite.
24) Explain Cash Reserve Ratio (CRR)?
Answer: – Cash Reserve Ratio (CRR) is defined as the portion or percentage of total deposits that bank has to maintain with RBI. Currently the Cash Reserve Ratio (CRR) is 4%.
25) Explain types of accounts in banks?
- i) Current or checking Account: In this accountbank allows you to access a range of daily banking services, such as receiving money (like your salary, pension or benefits payments), paying bills, and setting up direct debits and standing orders to make regular payments but you cannot earn interest on this account. The advantage of this account is that there is no limit for cash withdrawal.
- ii) Saving Account: In this account your money is save and also you get interest on it. The number of cash withdrawal is limited in this account and need to maintain the minimum amount of balance in the account to remain active.
iii) Money Market Account: This account can be opened with a minimum balance. Gives benefits of both saving account and current accounts. And also higher interest can be paid on it.
- iv) CD Account: CD stand for certificate of Deposit Account in such account you have to deposit your money for the fixed period of time i.e. five to seven years and you will earn the interest on it. The rate of interest is decided by the bank and you cannot withdraw the funds until the fixed period of time is completed.
26) What are the documents you should have at the time of opening an account in a banks?
Answer: – The interviewer might ask this question whether you have a bank account or not The Reserve Bank of India has advised banks to follow the Know Your Customer norms where personal information of the account holder is provided by the bank. This information carry photograph, proof of identity i.e. PAN Card, Driving license and Address proof such as electricity bill, Rent Agreement. Now, AADHAR cards and MNREGA cards are included in KYC papers. Without these documents a person will not be able to open bank account.
27) Explain things that you should keep in mind before opening the bank accounts?
Answer: – If you have to open a bank account, In case of saving account, check the current interest rate on the deposit and whether the interest rate remains constant for the period. If you have the checking or current account, then look for how many cheques are available for use. Few banks may also charge you for using paper cheques or ordering new cheque books. Also, check for different debit card option that is provided on opening an account and Net banking features.
28) Explain the different types of banking software applications?
Answer: – Banking software applications are as follows:-
- i) Internet banking system.
- ii) Core banking system.
iii) ATM (Automated Teller Machine) banking.
- iv) Stock market management system.
- v) Credit management system.
- vi) Investment management system.
vii) Loan management system
viii) Financial management system.
29) Why you want to join state Bank of India (or any other bank)?
Answer: – This is a most commonly asked question and you should be prepared well to answer it, for answering this question, you can say that I want to join state Bank of India. (Or any other bank) because it can provide me a stable career with good financial growth. It is one of the fastest growing sectors of the nation and also provides good facilities and allowance. There could be many other reasons for you wanting to join the banking sector for example proper timing, good working environment, directly get chances to interact with customers etc. The choice of reasons could be anything that is suitable for you as a person.
30) You have completed your MBA/BE/B.Tech/PHD degree, why you were not working in the field related to your education instead of joining Bank?
Answer: – You must give genuine and sensible answers to such question. For example- A MBA candidate may say that there are hardly good jobs in MBA or mostly sales job having target. And B.E / B.tech candidate may say that IT Company have a recession, at that time they tell their employees to left the job as per their requirement but being a government sector, banking is a safe sector providing great employment opportunities.
Note:-In answering this question, you must show your interest in joining banking sector and it should not look like you don’t have any other option so you are choosing it as a career.
31) As you know that, banking is transferable job, you belong to Pune will it be possible for you to re-locate to Nagpur, if required?
Answer:-You should always answer this question as Yes, because being a government job you have to be flexible to relocate or it is better to discuss this question with your family also before you go to face the bank interview.
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