Introduction
An Interview is the test of a personality of a candidate. Interviews primarily assess the capability of a candidate to a certain profession. Interview helps to ascertain the accuracy of presented facts and information about the candidate. Presentation, Confidence and Knowledge of the applied position and industry are the crucial factors in acing Interviews. Banking Interview Questions Set 3 - Read the most Frequently Asked Questions at in the Banking Recruitment Interviews.
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Banking Sector is pivotal to a country's economy. A Bank is a financial institution that can receive deposits and provide loans. Banks may also provide financial services such as wealth management, currency exchange and safe deposit boxes. Banking sector offers a wide variety lucrative career choices including Probationary officers, Analysts, managers, Investment Banking, Financial Planners, Credit Department, Loan Managers, etc. Career in banking demands skills in coordinating and directing the operational functions of financial institutions. Various leading private banks and public sector banks are recruiting candidates every year. Considering the significance of banking sector, several graduates are applying for various positions with the banks. Thus, the aspirants have to extremely well prepared to ace the competition. The article Banking Interview Questions Set 3 lists important Banking Job Interview Questions to assist in preparation of bank aspirants. Questions
Banking Interview Questions Set 3 - Important Banking Terminology
1. GDP
Answer :
The Gross Domestic Product (GDP) is an estimated value of the total worth of a country’s production and services, within its boundary, by its nationals and foreigners, calculated over the course of one year.
Hence, GDP = Consumption + Investment + Government Spending + Exports –Imports.
2. GNP
Answer :
The Gross National Product (GNP) is an estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign land, calculated over the course of one year.
Hence, GNP = GDP + NR (Net income inflow from assets abroad or Net income Receipts) - NP (Net Payment outflow to foreign assets)
3. Treasury Bills (T bills)
Answer :
Treasury Bills are instruments of short term borrowing by the Central/State govt. They are promissory notes issued at discount and for a fixed period. At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments.
Amount - Treasury bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000. Treasury bills are issued at a discount and are redeemed at par.
4. What is BSBDA?
Answer :
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.
5. Certificate of Deposits
- BSBDA 'Basic Savings Bank Deposit Account' 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 BSBDA 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.
Answer :
Certificate of Deposit (CD) is a negotiable money market instrument and issued in de -materialized form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period.
6. Commercial Paper
- Minimum Size of Issue and Denominations - Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum deposit that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter.
- Maturity - The maturity period of CDs issued by banks should not be less than 7 days and not more than one year, from the date of issue.
Answer :
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. It was introduced in India in 1990. Corp-orates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.
7. Banking Ombudsman Scheme
- Minimum & maximum period of maturity prescribed for CP - CP can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. However, the maturity date of the CP should not go beyond the date up to which the credit rating of the issuer is valid.
- Denominations - CP can be issued in denominations of Rs.5 lakh or multiples thereof.
- Who can invest in CP? Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs. However, investment by FIIs would be within the limits set for them by Securities and Exchange Board of India (SEBI) from time-to-time.
Answer :
It is a scheme which allows bank customers resolve complaints relating to services rendered by banks. It was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
8. Kisan Vikas Patra
- Banking Ombudsman is a senior official appointed by RBI to redress customer complaints against deficiency in certain banking services.
- All Scheduled Commercial Banks, RRBs & Scheduled Primary Co- Op Banks are covered under the Scheme.
- With the amendment, from 1 July 2017, the banking ombudsman scheme will include –
- i. sale of insurance, mutual funds and other third-party investment products by banks
- ii. mobile and online banking services.
- Now, a bank customer also files a complaint to Banking Ombudsman on following issues –
- i. Mutual Fund and Insurance policy - wrongly sold third party products such as mutual fund schemes and insurance policies.
- No fee is required for filing and resolving customers’ complaints.
- Increase in compensation amount: The RBI has increased the compensation limit from Rs 10 lakh to Rs 20 lakh.
- If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award.
- If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsman’s decision.
- The Appellate Authority is vested with a Deputy Governor of the RBI.
- If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal against the award before the appellate authority.
Answer :
Saving scheme relaunched by government of India.
Banking Interview Questions Set 3 - Kisan Vikas Patra - Key Points
9. Public Provident Fund (PPF) – Saving scheme.
- (i) Money will be doubles in 9 years 10 months (118 months).
(ii) KVP will be available in denominations of Rs. 1,000, Rs. 5,000, Rs. 10,000, and Rs. 50,000.
(iii) There will be no upper ceiling on investment.
(iv) Minimum lock-in period is 2 years and 6 months.
(v) KVP can be en-cashed in eight equal monthly installments after the lock-in period.
(vi) No KYC norms would be applicable at the time of purchase of KVP, PAN details will not be required
Answer:
Saving scheme
Banking Interview Questions Set 3 - Public Provident Fund (PPF) - Key Points
10. . Different Types of Bank Accounts
- (i) An individual can open account with Rs. 100/- but has to deposit minimum of Rs. 500/- in a financial year and maximum Rs.1.5 lakh.
(ii) Maturity period is 15 years but the same can be extended within one year of maturity for further 5 years and so on
Answer :
– Normally there are 4 types of deposits account in Bank which are –
Note: Now CA and SA together are known as demand deposit, since they are payable on demand. Suppose you need Rs.5000 today you withdraw Rs.5000 today.
11. National Electronic Fund Transfer (NEFT)
- (1) Saving Account
(2) Current Account
(3) Recurring Account
(4) Fixed Deposit Account
- Saving Bank Account - Savings account are basically for individuals and small businesses. You may Rs.1000 today, you may deposit Rs.1000 today. Tomorrow you may require Rs.5000, you may withdraw Rs.5000 tomorrow. Similarly a grocery shop owner may deposit Rs.10000 today and in need he may withdraw Rs.5000 tomorrow. This is not for large businesses. These accounts can be opened individually or jointly or by Hindu undivided family, there is a system invoked that is known as Hindu undivided family (the head of the family will operate the account).
- Another important point is, this is normally intended for person above 18 years of age but person b/w 10 to 18 years can also open individually without guardian but with some restrictions. Minor accounts i.e below 10 years accounts has to be opened with guardian only.
- Saving Bank account is basically for individuals and small businesses.
- The objective of saving bank account is to promote savings.
- The rate of interest payable is very nominal on saving accounts. At present it is 4 %
- Minimum Balance – (varies from bank to bank) – Normally Rs. 500 (without cheque book facility)
- Normally Rs. 1000 (with cheque book facility)
- Some banks like – HDFC, ICICI Bank - allow premium savings a/c deposits with minimum balance of Rs. 5000 or Rs. 10000.
- Bank offer zero balance accounts previously known as No – frills accounts / BSBDA and now under PMJDY
- If you go to some bank like ICICI or HDFC they may specify 10000/- min. balance in a metropolitan area, 5000/- in small towns, 2000/- in rural areas. So the min. balance may differ.
- If minimum balance is not maintained banks may impose penalty.
- If somebody (RBI) is controlling then it is regulation, if you (banks) are controlling i.e deregulation.
- Note: Banks are free to decide interest rate on Savings bank a/c deposits.
- From 1st April 2010 interest on SA is calculated on daily basis taking into account minimum balance available.
- Interest on SA is around 4 %.
- Firms and companies are eligible to open account.
- Current bank accounts are operated to run a business.
- It is a non-interest bearing bank account.
- No limit on either the number of transactions or the maximum amount of transactions
- Overdraft facility (short term loan facility) is available.
- It needs a higher minimum balance to be maintained as compared to the savings account.
| Saving Bank Account | Current Bank Account |
|---|---|
| Bank pays interest on daily basis | Bank does not pay any interest on current account |
| Restriction on the number and amount of withdrawals | There is no restriction on the number and amount of withdrawals |
| SA can be opened by individuals, small businesses and students, etc. | Current Accounts are for big businesses, companies and institutions, etc. |
| Nomination facility is available for SA deposits. | Nomination facility is normally not available for CA deposits |
- CASA RATIO – The Ratio of the deposits in the form of Current Account & Saving Account to the total deposits is known as CASA Ratio (normally expressed in %). More CASA ratio banks are in the safe zone. ICCI, AXIS, HDFC & SBI have CASA Ratio more than 40%.
- Fixed Deposit and Recurring Deposit - these deposits are TIME deposits (as for specified agreed period b/w you and the bank). In these deposits interest paid by the bank is slightly higher than CA & SA. It’s like “sabar ka fal mithahota hai”.
- • FIXED DEPOSIT can be operated for a tenure ranging from 7 days to 10 years in Indian banking system.
- Not payable on demand and do not enjoy cheque facility.
- .Present interest on FD is 8.75% but Interest rate may increases with the time period.
- Interest rates will be slightly higher for senior citizens (60 + years of age)
- Premature withdrawal of the deposits is possible, but it attracts penalty at the rates varying from 0.5% to 1.5%
- If the deposits are Rs. 1 Crore or more, they come under bulk deposits and interest rates may vary further.
- Loan facility is available on principal as well as on interest.
- Recurring Deposit – Recurring Deposit is a special kind of Term Deposit offered by banks in India which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits.
- The main objective of recurring deposit account is to develop regular savings habit among the public.
- In India, minimum amount that can be deposited is Rs.10 at regular intervals.
- The period of deposit is minimum six months and maximum ten years. (Minimum tenure varies banks to banks. Some banks allow minimum tenure in RD for 3 months.)
- Minimum balance can be deposited under RD is Rs. 500 per month and thereafter in multiples of Rs 100/-
- The rate of interest is higher.
Answer :
It is a payment system which facilitates one-to-one funds transfer. Under this facility, any customer can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country.
12. Real Time Gross Settlement (RTGS)
- Transaction Limit: There is no minimum and maximum limit of amount.
- Note: For cash-based remittance and remittance to Nepal - the maximum amount per transaction is limited to Rs 50,000.
- Timing: At present, NEFT operates in half-hourly basis - There are twenty-three half-hourly settlement batches run from 8 am to 7 pm on all working days of week (Except 2nd and 4th Saturday of the month).
Answer :
Under this facility the transfer of funds is done individually on an order by order basis (without any delay). The RTGS system is primarily meant for large value transactions.
13. Indian Financial System Code (IFSC)
- Transaction Limit: The minimum amount is Rs. 2 lakh. There is no upper ceiling for RTGS transactions.
- Timing: The RTGS service window for customer's transactions is available to banks from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end. However, the timings that the banks follow may vary depending on the customer timings of the bank branches.
| Amount | RTGS | NEFT |
|---|---|---|
| Minimum Amount : | RS 2 lakhs | No minimum limit |
| Maximum Amount : | No upper ceiling | No upper ceiling |
Answer :
It is a 11-digit alpha-numeric code which identifies a bank-branch participating in the NEFT & RTGS system. 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.
Note: IFSC code represent –
14. About NPCI
- First 4 alpha characters indicate – bank name
- Fifth characters is – 0
- Last 6 characters indicate – bank branch.
- For ex - SBIN0000125 – Here – SBIN indicates – State Bank of India. 0124 represent the Lucknow Main Branch name.
Answer :
National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments system in India. It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
15. About Unified Payments Interface (UPI)
- NPCI – Headquarter: Mumbai, Maharashtra
Answer :
It is an instant payment system to transfer money between two parties bank accounts. It is a similar to NEFT or RTGS transfers in that way. It is developed by the National Payments Corporation of India (NPCI).
16. Immediate payment service (IMPS)
Answer :
It is an instant real-time payment service which help customer to transfer money anytime and anywhere in India. This service is similar to NEFT and RTGS and available 24/7 throughout the year including bank holidays. This service is offered by National Payments Corporation of India (NPCI).
17. Interbank Mobile Payment Service (IMPS)
- Transaction limit – There is a maximum limit of 2 lakhs.
Answer :
It is an instant inter bank fund transfer service in which mobile phones are used as channel through which transaction happens with the use of Mobile Money Identifier (MMID). For each account, MMID is generated by bank and it is linked with registered mobile number. Now, account details are fetched from MMID and via registered mobile number transaction occurs.
18. *99# Service –
- Only MMID and Registered Mobile Number of Payee are needed. Mobile Money Identifier is a 7 digit number, issued by banks.
- Transaction Limits - RBI has defined the maximum limit per day transaction. If transaction happens in encrypted format (from net banking) then limit is 50,000 rupees per day whereas if transaction happens in un- encrypted messaging formats (from mobile instrument via text message) then limit is 1,000 rupees per day.
Answer :
It is a mobile banking facility which is based on Unstructured Supplementary Service Data (USSD). With the help of this service a bank customer can perform financial activities by just dialing *99# from his/her mobile registered with the bank. *99# is a common number across all Telecom Service Providers (TSPs). The service works across all GSM service providers and handsets.
19. About Unstructured Supplementary Service Data (USSD)
Answer :
USSD allows transmission of information through a GSM (Global System for Mobile Communications) network. It is used to send text message between a mobile phone and application program in the network. At present, it is one of the best accessible communications technology to deliver mobile financial services to low-income customers.
20. Aadhar Enabled Payment System (AEPS)
Answer :
It is an Indian payment system which is based on unique identification number, the AADHAAR. The system allows a person holding an Aadhaar number to carry out financial transaction on a Micro-ATM provided by the Banking correspondent. It is developed by National Payments Corporation of India.
21. . Aadhaar Payments Bridge System (APBS):
Answer :
It is a payment gateway platform used for Aadhaar schemes. Under this facility - Aadhaar number used as a central key for electronically channelizing the Government subsidies and benefits in the Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries. It is developed by National Payments Corporation of India. It was used for the first time on 1 January 2013 when Direct Benefit Transfer was launched by Government of India.
22. BHIM APP
Answer :
Bharat Interface for Money (BHIM) is an instant payment application which allow users to transfer fund with the help of mobile phone. It is based on the Unified Payment Interface (UPI) and developed by National Payments Corporation of India (NPCI).
23. What is ‘Bill Purchase’?
- The Prime Minister Narendra Modi launched BHIM app for Android and IOS devices on 30th Dec 2016 at the Digi Dhan Mela event in New Delhi.
- Maximum limit - User can transfer maximum amount up to Rs 20,000 in a day.
- You can send up to Rs. 10,000 in a single transaction.
- Transaction Charges – There is no transaction charges.
- UPI PIN – It is a four or six digit number which is set by the users itself on BHIM after the registration process. UPI PIN is used for authenticating all transactions done on UPI platform (BHIM or *99# or UPI apps).
- VPA - Virtual Payment Address (VPA) is a unique identifier which you can use to send and receive money on UPI.
Answer :
In ‘Bill Purchase’ the loan will be created for the full value of the draft and the interest will be recovered when the actual payment comes. For example, a ‘Sight draft’ is presented for which the loan is created for 100% of the draft value. The money is received after 7 days, and then the interest will be recovered for 7 days along with the principal amount.
24. What is ‘Cheque Discount’?
Answer :
Cheque discounting service is offered only by few banks. For instance, if you have a cheque of $3000 outstation and the cheque will take 7 seven days for clearance, then bank will offer you a service for early payment. The bank can make an early payment, but they will pay only for certain percentage of the actual amount, here they will pay you $2000 but they will charge interest on it and the remaining $1000 will be paid, once the outstation cheques get clear.
25. AEPS –
Answer :
Aadhar Enabled Payment System
26. APBS
Answer :
Aadhar Payment Bridge System
27. ATM
Answer :
Automated Teller Machine
28. ALM
Answer :
Asset Liability Management
29. BBPS
Answer :
Bharat Bill Payment System
30. BHMI
Answer :
Bharat Interface for Money
31. CBS
Answer :
Core Banking System
32. CIDR
Answer :
Central Identities Data Repository
33. CTS
Answer :
Cheque Truncation System
34. CDR
Answer :
Corporate Debt Restructuring
35. CASA
Answer :
Current Account Saving Account
36. CDA
Answer :
Capital Account Deficit
37. CRR
Answer :
Cash Reserve Ratio
38. ECS
Answer :
Electronic Clearing Service
39. FRBM
Answer :
Fiscal Responsibility and Budget Management
40. LGD
Answer :
Loss Given Default
41. LTV
Answer :
Loan To Value
42. GNFV
Answer :
Gross Negative Fair Value
43. SFTs
Answer :
Securities financing transactions
44. HCE
Answer :
- Host Card Emulation
45. PFE
Answer :
Potential Future Exposure
46. ICAAP
Answer :
Internal Capital Adequacy Assessment Process
47. IFSC
Answer :
Indian Financial System Code
48. IMPS
Answer :
- Immediate Payment Service
49. IMPS
Answer :
Interbank Mobile Payment Service
50. MMID
Answer :
Mobile Money Identifier