 What are the elements of effective Communication?

 Don’t you think Govt is bit late in giving Madan Mohan

 Explain Accounting Standards? Malviya a Bharat Ratna?
 Explain Accounting Conventions?  Who was Madan mohan Malviya? Expalin elaborately.
 What is Accounting Equation?  Is BJP right for India?
 What is the use of Trial Balance?  Explain Peshawar Attack.
 What is Fund Flow?  What is Moral policing?
 What is Cash Flow?  What is kiss-of-love movement?
 What is Working Capital?  Why Modi visiting several countries frequently? Don't
 What are LIFO, FIFO, and HIFO? you think it is unnecessary?
 What is Short Working?  Why MOM is neccessary for us? Without that we can't
 What is Work in Progress? eat or what?
 What is Intangible Assets?  Increase in E-Commerce is good or bad? If good, why
 Tell us the Errors which are not disclosed by Trial retailers don’t like the? (P.S.: Through Retailers, Govt.
Balance? earning more money)
 What is difference between Public Sector Company  Recently 1 cricketer died of bouncer, what was your
and Public Limited Company? feeling? Bouncers should be banned?
 What is Real Account?  Why Planning Commission Abolished?
 Who is Bodo militant? Why they were in News?
 What is wrong with Rahul gandhi? Why he is not as
famous as Modi? (General Elections prospect)
 Why is the insurance bill so important?
 The right to fair compensation and transparency in
land acquisition, rehabilitation and resettlement Bill
2012?
 What is article 370, and why it was in news?
 What is coalgate scam? And how it leads to e-coal
auction?
 Tell me about the success stories of ISRO in 2014?
 What do you think about plane crashes? Who have to
be blamed? Aviation Industry or Private Airlines? Why
Government not takeover all private airlines and
airports?
 What do you know about Ebola outbreak? Tell me
Finance some symptoms?
 Difference between FDI and FII..?  Do you really know about Kailash Satyardhi before he
 What is Sensex? took Nobel? He deserves it or not?
 What is Nifty?
 Difference between Cheque and DD. 1. Tell me something about yourself?
 What is NBFC? Generally this is the first question which is put up in front
 Difference between Banks and NBFC. of the candidate appearing in the interview. To answer
 What is KYC? Is it really useful to restrict Black Money, this, the candidate must tell his name, place of residence
how? and his current work or educational degree along with a
 Demat account? very brief note on his family-father, mother and siblings.
 Shares? He/she can also tell about his father or mother’s
 Brockers? occupation. Some key points to note here are:-
 Bullion market?  He must know the meaning of his name and specific
 RBI, SBI, NPA? reference with his name if any. For ex:- a boy named
 What is meant by willful defaulters? Who displays this “Prashant” was asked about the geographical
and why? What are the effects of being declared as connection of his name i.e. Prashant Mahasagar or
willful defaulter by them..? Pacific Ocean.
 The answer should be precise and questions like- if
Random Questions – your father is a teacher then why do you want to
 Share some views about Malala. She deserved Nobel or become a banker? Can come up from your answer to
not? the first question. Be prepared with the answers to
 Do you believe that Atal Vihari Bajpayee deserved these expected questions.
Bharat Ratna?  Because this is the first question so the candidate must
give a short and effective answer. You might be
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 nervous at the beginning but remember to keep a
smile on your face.
2. Where have you come from and what is famous in
your city?
The candidate must tell about his place of living- city and
state. If the board further asks about any specifications,
then name of the district etc. should be told. He/she must
tell about the famous things of his place. For ex:- a
candidate from Lucknow may tell about Imambara,
chicken clothes, “tehzeeb” of Lucknow etc. The key things
to deal this question effectively are:-
 The candidate must know about the local MLA and MP
from his area. If any renowned personality belongs to
that area, you should be aware of the details.
 He must have full knowledge about that place, its
history, famous monuments, personalities, rivers, at
times even number of railway stations in the city etc.,
also about the politics of that state-CM and ruling
party and all other Nitti gritties of his place.
 For ex: - A candidate from Ghazipur, U.P. was asked
about cultivation of “Poppy seeds” as Ghazipur is
famous for cultivation of poppy seeds.
 At times, questions about local politics are also put
forward like a candidate, from Amethi was asked
about the electoral battle between Rahul Gandhi and
Kumar Vishwas form Amethi.
 A good answer to such questions leaves a very positive
impact on the board as it demonstrates your
awareness about the surroundings and the fact that
you are well prepared puts you ahead of others.
3. Why do you want to join the banking industry?
To answer this question, you can say something like –“I
want to join this industry because it can provide me a
stable career with good growth prospects. It is one of the
fastest growing sectors of the nation and provides great
career opportunities. There could be many other reasons
for you wanting to join the bank industry for e.g. it is an
honest organization, good working conditions, chances to
directly interact with public etc. The choice of reason could
be anything that suits you as a person. This is a very
commonly asked question and you must be prepared to
answer it.
4. Please tell us about your strength and weaknesses.
Here, the answers vary from candidate to candidate. But
the strength and weakness should be such that they match
up to or are in synchronization with the personality of the
candidate. For ex:- If a candidate says that his strength is is
general awareness while in reality he possesses least
knowledge of current affairs - cross questioning can easily
unveil him and could actually land him in trouble. Some
key things to answer this question effectively are:-
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 Try to put forward a strength which is useful in the
banking sector. For ex: - good communication skills,
adjustable etc. The strength should bring about a
positive aspect of your personality in front of the
board.
 This is a question from which you can actually turn the
interview in your favour. For ex:- If you say something
like, “I have won many awards in debate competitions
so I would think that good oratory skills are my
strength.”
 This way I can inform the board about my previous
achievements also and can get an advantage over
others.
 They may ask how your quality/strength will be
helpful to bank. Be prepared with an answer.
 Weakness should not be very negative like short
temper, irregular etc. as they leave a bad impression.
 Remember, this question is the golden chance for you
to turn the ball in your court. In the answer you must
introduce all your unique talent in front of the board.
So that the interview enters in your own comfort zone.
5. After doing B.Sc/B,tech/MBA/MA why do you want
to choose banking? Why not something related with
you field of education?
You must give honest and sensible answers to such
question. For ex:- A MBA candidate may say that there are
hardly good jobs in MBA as of now. Banking is a safe sector
providing great employment opportunities. In the answer,
you must show your keen interest in joining banking
sector and it should not look like you don’t have an option
so you are choosing it. You can also expect some questions
from academics. A science stream student may be asked
about about Newton’s Law etc. So, you must also prepare
the subjects studied by you in the degree.
6. What are the basic documents a person requires to
open an account?
The RBI has advised banks to follow the Know Your
Customer (KYC) guidelines where some personal
information of the account holder is obtained by the bank.
This information includes: - photograph, proof of identity
and proof of address. In 2013, AADHAR cards and
MNREGA cards are included in KYC papers. Without these
documents a person can’t open his account. Key points:-
 The interviewer might ask whether you have a bank
account or not.
 It is preferable to have an account and to know about
the process because it will only help you if such
questions come up.
7. Who is the governor of RBI?
As of today (March’14) , you can answer this as, Mr.
Raghuram Govind Rajan is the 23rd governor of RBI.
Before taking reins as RBI governor he was an officer on
special duty in RBI. He has also served as economic advisor
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in PMEAC. His tenure is of 3 years ending in September
2016. Key points:-
 In IBPS interviews, you must have a quick read about
the prominent personalities of banking industry,
especially governor and deputy governors of RBI.
 You must address the name of personalities by using
Mr. or Madame in case of male and female
respectively.
 Try to keep yourself updated about the recent
happenings of at least the month prior to interview.
 This bank is very important because it is the latest and
27th PSB of India. So, try to know every basic point
about BMB.
 Initial capital of Rs. 1000 crore.
 Similarly, if there has been some other initiative in
that year, you should be well aware of it.

8. Tell us something about the 27th or latest public

sector bank in India
9. What do you understand by the GDP of the country?
Sir, the 27th public sector bank in India is Bhartiya Mahila
The final value of all the goods and services produced
Bank. It was created by Finance Bill 2012. The first BMB
under the geographical area of a country is the Gross
was opened in Mumbai on 19th November 2013 on the
Domestic Product of that country. GDP is calculated at
94th birth anniversary of Indira Gandhi. India is the third
consumption, investment and exports and imports are
country in the world to have a bank especially for women
subtracted from the sum of these three.
after Pakistan and Tanzania.
 Tagline- “women empowerment economically”.
 Head- Usha Anantha Subramanayam
 The bank allows deposit from everyone, but lending
will be focused for women.

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10. What is a Non -banking Financial Company (NBFC)?
Difference between NBFC and banks?
A NBFC is a company registered under the companies act,
1956 which is involved in the business of loans,
shares/stocks, etc. Non-banking financial companies are
financial institutions that provide banking services, but do
not hold a banking license. These institutions are not
allowed to take deposits from the public. NBFCs do offer all
sorts of banking services, such as loans and credit facilities,
retirement planning, money markets, underwriting, and
merger activities. The basic difference between bank and
NBFC is:-
 They can’t accept demand deposits.
 They are not a part of the payment and settlement
system and can’t issue cheques drawn on themselves
 They are not registered in the banking act and don’t
have a banking license.
 They don’t have to maintain CRR, SLR or CASA like
banks.
12. What is the difference between nationalized banks
and private banks?
A nationalized bank is owned by the govt. of that country
and is also known as public sector bank whereas a private
sector bank is owned by an independent individual or
company.
13. What are the Non-Performing assets of a company?
A NPA is an obligation payable to the bank which has not
been made or the interest and principal amount has not
been paid on the due time. NPA is the loan or credit
provided by the bank to its customers which could not be
recovered in due time. Thus NPA is somehow not yielding
any income to the lender either in the form of principal or
interest payments. NPA is also known as “bad debts”.
 NPA is shown at the assets side of the balance sheet
whereas deposits are shown at the liability side.
 If there is any recent story or news regarding NPA,
then revise it thoroughly. For ex:- Recently, United
bank of India was marred in loss due to its rising NPA.
So was the case with Kotak Mahindra Bank.
14. What are the various risks that banks face?
Sir, there are mainly three types of risks faced by banks:-
 Credit Risk: - loan or NPA.
 Market Risk: - Money invested in the market.
 Operational risk: - Day-to-Day working risks.
15. What do you mean by term “CASA” related to bank?
CASA stands for Current Account Savings Account. The
CASA ratio shows how much deposit a bank has in the
form of current and saving account deposits in the total
deposit. A higher CASA ratio means better operating
efficiency of the bank because on current account there is
no interest payable whereas on savings account a tiny
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3.5% interest is payable by the bank. CASA ratio shows
how much of the deposit of the bank comes from the
current and savings deposit.
16. What is the difference between cheque and
demand draft?
Cheque is a negotiable instrument which is paid to the
bearer but a demand draft is a negotiable instrument
always payable on order.
17. What are the parts of banks’ capital?
Bank has following parts of capital:-
 Tier 1 capital:- Paid up capital (core capital) +
Reserves (owners or promoters’ fund)
 Tier 2 capital:- Secondary Capital (borrowed funds) +
general loss reserves + subordinated term debts +
undisclosed reserves (can’t be maintained in India)
 Tier 3 capital: - same as tier 2 capital but with a higher
amount in order to face the market risks of the bank.
18. Tell us something about BSBDA.
BSBDA stands for Basic Savings Bank deposit account.
BSBDA is the new name for “no-frill accounts” under which
anyone can open a bank account with even zero balance in
it or “zero balance account”. This BSBDA is aimed at
providing banking facilities to weaker section of the
society and improve financial inclusion. All scheduled
commercial banks in India including foreign banks with
branches in India have to avail BSBDA. Important:-
 Such accounts are opened with “relaxed KYC norms”.
 Relaxed KYC norms include an affidavit by the
Pradhaan or councilor of a village or area confirming
about the person concerned.
 In such accounts there are certain restrictions- in a
month, 4 withdrawls can be done at a maximum. This
includes ATM withdrawls. The amount withdrawn in a
month shouldn’t exceed Rs. 10,000 and the balance in
the account at anytime shouldn’t exceed Rs. 50,000.
19. What is the meaning of “base rate”?
Base Rate is the minimum rate of interest which a bank has
to charge from its customers and a bank can’t sanction
loan on a rate below the base rate. This rate came into
effect from July 1 2010. Before Base rate there was Basic
Prime Lending Rate or BPLR introduced in 2003. It was
replaced with Base Rate because in BPLR banks had an
option to loan their special customers below BPLR. Banks
may choose any benchmark to decide on the base rate. The
exceptions of base rate are:-
 Agriculture loans
 Govt. sponsored schemes
 Staff loans
Only under the above cases, bank can lend below base rate.
20. We hear regularly that all bank branches are
turning CBS. What is CBS?
Sir, CBS stands for CORE banking solutions under which
the branches of the banks are interconnected with each
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other through intra net with a central database server.
Now, with this facility, a person having an account in a
certain branch of the bank can operate from any other
branch of the same bank. He need not visit the same
branch to operate his account. The CORE word in CBS
stands for Centralized Online Realtime Exchange.
21. What is Para Banking?
Para Banking includes all the services provided by banks
apart from day to day banking. For example: - Debit cards,
Credit cards, Life Insurance products, Cash Management
services etc.
22. What are the components of the monetary policy of
RBI?
The components of monetary policy include CRR, Repo
rate, reverse repo rate, SLR, MSF and Bank Rate.
23. What is priority sector credit?
All Indian banks and foreign banks (which have more than
20 branches in India) are required give 40% of their credit
to priority sector out of which 18% is for agriculture. In
case of Regional Rural Banks, 60% credit is to be given to
priority sector. Priority sector includes- Agriculture, Micro
and small enterprise, Education loan and housing loan.
Priority sector lending is one of the most important part of
a bank’s lending and it is devoted towards those sector
which are important for public welfare.
24. What is the difference between Micro finance and
micro credit?
Micro credit is giving a small amount of loan to the
customers whereas Micro Finance is a wide term. It
includes small loan + training on financial matters. In other
words, Micro finance= Microcredit + Financial Literacy.
25. What is financial inclusion? (One of the most
important questions).
Financial inclusion is the availability of banking services at
a affordable cost in order to include the weaker section of
the society in the banking system. In 2004, Kofi Annan
(UNO Head) was addressing UNESCO conference and the
word “Financial Inclusion” was for the first time used by
him at that time. In 2006, a committee was made under the
chairmanship of Mr. HR Khan for financial inclusion and
the report said that 57% of Indian population was
deprived of banking facilities.
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26. What are the steps taken by banks to promote
financial inclusion?
 Publicity of banks so that more and more people open
the accounts.
 BSBDA so that poor people can also open their
account.
 People with agriculture land are being provided with
Kisan Credit Card.
 General Purpose Credit card provided to people with
no agricultural land where maximum limit of
withdrawal is Rs.15,000 and rate of interest is 4%.
 Ultra small banking and banking correspondents.
 CRISIL has made an index to calculate financial
inclusion named as “CRISIL INCLUSIX” and in June
2013, there was 40% financial inclusion as per the
index.
27. What is REPO rate and reverse REPO rate?
Repo rate is the rate at which banks borrow from RBI
during shortage of funds. This is a short term loan
provided for upto 90 days by selling securities to RBI and
receiving money in lieu of it. Reverse repo rate is the rate
at which banks deposit their excess liquidity with the RBI.
In other words, the rate at which RBI borrows from banks
by selling securities in order to control excess liquidity in
the market is reverse repo rate. Liquidity Adjustment
Facility (LAF) introduced in 2000 has a provision that
reverse repo rate will be 1% less than the Repo rate.
28. What is Bank rate?
It is same as repo rate but here the time period is for more
than 90 days.
29. What is Cash Reserve Ratio (CRR)?
CRR is the part of Net Demand and Time Liabilities (NDTL)
or cash of the bank deposited with the RBI. A higher CRR
makes loans expensive as liquidity is controlled by RBI.
NDTL is the deposits of the customers with the bank. Net
demand liabilities are deposits payable on the demand on
customer, or when the customer wants. Ex:-current
account, savings account. Time liabilities are the deposits
which are payable only on a specific time or after a period
of maturity. For ex:- Fixed deposits, Recurring Deposits.
30. What is Statutory Liquidity Ratio (SLR)?
SLR is the amount of NDTL which a bank needs to maintain
in the form of cash, gold or govt. securities before
providing credit to its customers. Through SLR, RBI makes
sure that bank always have a reserve amount out of their
deposits to meet any future contingencies.
31. What is Marginal Standing facility (MSF)?
In MSF, banks borrow money from RBI for upto 24 hours.
MSF is always 1% above the repo rate and banks can draw
only upto 25 of their NDTL from RBI.
32. What is Term Repo?
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Under term repo, RBI lends to banks through auction of
funds. The minimum interest charged has to be above the
repo rate and there is no limit for maximum interest rate
because auction is made on the rate of interest.
33. What is white label ATM?
It refers to ATMs owned by corporate or private operators
seeking to earn a commission by banks for transactions
performed by their customers. For ex:- INDICASH by TATA
group.
34. What is brown label ATM?
It refers to the ATMs where investment, installation and
maintenance is by a private operator but the license and
branding is by a commercial bank.
35. Tell us something about NABARD and its functions.
NABARD was established by an act of Parliament on 12
July 1976 as National Bank for Agricultural and Rural
Development. It is the apex bank to provide rural credit
and monitor the RRBs. The main functions of NABARD
are:-
 Provide refinance to RRBs and other banks in rural
areas for lending.
 Acts as a subsidiary for RRBs and co-operative banks.
 It has two subsidiaries:-
 NABFINS:- NABARD financial
 NABCON: - NABARD consultancy.
36. What is banking ombudsman scheme?
The banking ombudsman scheme is a scheme to listen to
customer’s grievances and complaints regarding certain
services provided by the bank. It was introduced under the
Section 35 A of banking regulation act, 1949 by RBI with
effect from 1995 which was later amended and became the
banking ombudsman scheme, 2006. Customer can appeal
against the decision of ombudsman to deputy governor of
RBI. He is the highest authority of appeal. All banks in
India are covered under the scheme.
37. What is the difference between FII and FDI?
FDI or foreign direct investment is an investment that a
parent company makes in a foreign country. FII or Foreign
Institutional Investor is an investment made by an investor
in the markets of a foreign nation. FII can enter the stock
market easily and also withdraw from it easily. But FDI
cannot enter and exit that easily as FDI only targets a
specific sector.
38. What is the CAD? What is Fiscal deficit?
CAD or current account deficit is the difference between
the imports and exports of a nation in one financial year
whereas fiscal deficit is the difference between total
revenue and expenditure of a nation.
39. What is inflation and deflation?
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Inflation is the increase in the price of goods and services
due to more demand and less supply. In inflation, there is
more liquidity in market which has to be controlled to
reduce the purchasing power of customers. Deflation is the
decrease in prices of goods and services due to more
supply and very less demand. In deflation, there is lack of
liquidity in market which results in very weak purchasing
power of people.
40. What is Capital Adequacy Ratio? What is DEMAT
account?
CAR is the proportion of capital to the banks’ risk. DEMAT
accounts are those in which shares, securities and
insurance policies are kept in electronic form.
41. Name a few poverty eradication schemes of govt. of
India.
Food Security bill, MNREGA, Sarva Shiksha Abhiyaan,
Antoday Yojana, JNURRM, Swalamban Yojana, Nirmal
Gram Yojana, Rajiv Awas Yojana, Indira Gandhi Pension
plan etc. (Also read in detail about these schemes.)Apart
from the questions listed above, the candidate needs to
thoroughly read about the latest happenings at the time of
his interview. He must read the newspaper of the very day
of his interview because there have been many instances
where the board asks the news of that day. He needs to
prepare a full note about RBI, and types of banks, functions
of RBI, and the latest monetary policy given by RBI etc. and
many other banking terms and facts, insurance facilities
provided by banks, important bills like food security bill,
RTI etc.
Public finance and budget process Questions Asked in
Interviews
Q1. What is budget?
Ans. The ‘Budget System’ in India was first introduced on
7th April 1860 by James Wilson, the first Indian Finance
Member. The budget is the ‘Statement’ of the estimated
receipts and expenditure of Government for that year. This
‘Statement’ is called the “Annual Financial Statement”.
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Q2. What points are covered in the “Annual Financial
Statement”? Q1. What is a bank?
Ans. The “Annual Financial Statement” consists of: Ans. Bank is a financial institute where we deposit the
 Statements of expenditure. money. The bank accepts this money for the purpose of
 Ways and means to raise the revenues. lending and repays it on demand.
 An analysis of the actual receipts and expenditure of
the closing year.
 The causes of any surplus or deficit in relation to such
year.
 An explanation of the economic policy.
 Spending program of the government for the coming
year.
Q2.What is the major functions of any bank?
 Prospects of revenue.
Ans. Major Functions of bank are:-
 Accepting deposits from public or firm.
Q3. How is the “Budget” processed?
 Lending money to public.
Ans. In our parliament two budgets are presented.
 Transferring money from one place to another.
1. Railway budget
 Credit creation.
2. General budget
 Act as trustee.
Both budgets are presented in Lok Sabha. The Railway
 Keep valuables in safe custody.
Budget is presented by the ‘Minister of Railway’ and the
General Budget is presented by the ‘Finance Minister’. The
Q3. In how many types you may categorize the bank in
Budget speech is represented in two parts:
India?
 PART A –“General Economic Survey” and
Ans. We can categorize the banks into five categories :
 PART B –“taxation proposals”.
 Central bank (RBI)
One copy of the budget is presented in Rajya Sabha also.
 Public sector banks
After few days the discussion starts on the presented
 Private sector banks
Budget. Budget was discussed in two stages:
 Co-operative sector banks
 General discussion followed by detailed
 Development bank or financial institution
discussion and
 Voting on demands for grant.
Q4. What are scheduled commercial banks?
After receiving ‘demands for grants’ and detailed
Ans. Scheduled commercial banks are those banks in India
discussion by the different ministries the budget is
which were included in the second schedule of Reserve
processed.
Bank of India (RBI) Act, 1934.

Q5. In which year national housing bank (NHB) started

Q3. What is “Consolidated Fund”?
Ans. It is the most important of all government funds. All
government expenditures are made from this fund except
the items met from ‘Contingency fund’ and ‘Public Account
Fund’. No money can be withdrawn from this fund without
Parliament’s approval.
Q4. What is “Contingency Fund”?
Ans. Any urgent expenditure is met from this fund. Rupees
500 crore fund is at the disposal of the president. If any
unforeseen expenditure is incurred from this fund
requires approval from the parliament and amount
withdrawn is returned to the fund from consolidated fund.
its operation?
Ans. NATIONAL HOUSING BANK (NHB) started its
operations in 1988.
Q6. Under which act were the State Bank of India and
its subsidiaries nationalised?
Ans. The State Bank of India and its subsidiaries where
nationalized under SBI Act, 1955.
Q7. What is non-scheduled bank?
Ans. Non –scheduled bank in India means a banking
company as defined in clause (C) of section 5 of the
BANKING REGULATION Act, 1949.

Q5. What is “Fiscal Deficit”?
Ans. It refers to the excess of all expenditures, which
includes the capital and revenue plus net lending over total
revenue receipts and external grants. This explains the
total expenditure and borrowing by the government.
Banking structure questions
Q8. What are Co-operative banks? Ans. Co-operative
banks are organized under the provision of co-operative
credit society’s law of state. The major beneficiary of this
bank is agricultural sector.
Q9. Which is the first bank that was incorporated at
the initiative of World Bank and in which year?

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Ans. The Industrial Credit and Investment Corporation of
India Limited (ICICI) in the year 1955. Q19. Which committee had worked for the
recapitalization of Regional Rural Banks (RRB’s)?
Q10. How may development banks are there in India Ans. K.C. CHAKARABARTY worked for the recapitalisation
and name them? of RRB’s.
Ans. There are six development banks are there in India.
They are: Q20. The authorized capital of NABARD in 2013 was
 ICICI raised up to what limit?
 IDBI Ans. In the year 2013 the authorized capital of NABARD
 SIDBI raised up to 20000 corers.
 EXIM BANK
 NHB Q21. The BASEL COMMITEE was formed in which year?
 NABARD Ans. The BASEL COMITTEE was formed at the end 1974.

Q11. In which year Indian Banks Association (IBA) was Q22. Which bank comes under the category of APEX
formed and initially with how many members? banks.
Ans. IBA was formed in 26 September, 1946 with 22 Ans. Reserve Bank of India (RBI) and National Bank for
members. Agriculture and Rural Development (NABARD) come
under the category of APEX banks.
Q12. What is KYC?
Ans. KYC is the acronym for “know your customer”, which Q23. Which kind of operations are included in
is termed for the process of proper identification of treasury operations?
account holder. Ans. The treasury operations include the following:-
 DEBT MARKET
Q13. What is CRAR?  EQUITY MARKET
Ans. The Reserve Bank of India had made a norm that  MUTUAL FUNDS
every bank has to maintain an adequate amount of capital  DERIVATIVES
on continuous basis and this adequacy of capital is  FOREX OPERATIONS
measured in terms of CAPITAL TO RISK-WEIGHTED  TRADING
ASSEST RATIO which is also known as CRAR.

Q14. What is the minimum amount of money that

should be remitted through RTGS?
Ans. We can remit Rs 2,00,000/- minimum through RTGS.

Q15. Who insures the banks in India?

Ans. Deposit Insurance and Credit Guarantee Corporation
(DICGC) insure the banks in India.
Q24. What do you mean by CASH CREDIT?
Ans. CASH CREDIT is the system formed by the banks
Q16. Which was the first Indian bank to get an ISO
which allows the borrower to draw amount up to the
certification?
Ans. CANARA bank was first Indian bank that got an ISO specified limit.
certification.
Q25. What do you understand by OVERDRAFT?
Q17. Name the financial institution built by Industrial Ans. OVERDRAFT is the facility granted by bank to the
customers of current account by which they draw the
Development Bank of India (IDBI)?
amount more than the credit balance in their account.
Ans. The financial institutions built by IDBI are:-
 NATIONAL STOCK EXCHANGE OF INDIA (NSE)
Q26. How many types of debit card do the banks
 THE NATIONAL SECURITIES DEPOSITORY SERVICE
provide to their customers in India?
LIMITED (NSDL)
Ans. The following are the types of debit cards provided by
 STOCK HOLDING CORPORATION OF INDIA (SHCIL)
the banks in India are:-
 VISA CARD
Q18. According to Narasimham committee what is the
 MAESTRO CARD
minimum amount of money that is statutorily
required by the NBFC’s for registration?  MASTERCARD
 RUPAY CARD
Ans. According to Narasimham committee NBFC’s require
Rs.25,00,000 for registration.
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Q27. How many type of deposits does Indian banking
deal with?
Ans. The Indian banking industries deal with the following
types of deposits:-
 Term deposits
 Demand deposits
 Current deposits
 Savings deposits
Q28. Classify the business of banking?
Ans. Business of banking can be classified into four
categories:-
 Retail banking business
 Wholesale banking business
 Treasury operations
 Other banking activities
Q29. What are the major products of the banking
industry?
Ans. There are three major products in the banking
industry:
 Deposit products
 Credit products
 Customized banking services
Q30. Which Act allows the bank and financial
institutions to auction the properties when borrower
fails to repay the loans?
Ans. SARFAESI Act, 2002 allows the banks and financial
institutions to auction the properties when borrowers fail
to repay their loans. The acronym for SARFAESI is
“Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest”.
Q31. What is the significance of IFSC code?
Ans. The acronym for IFSC is “Indian Financial System
Code”. It is an alpha numeric 11 digit codes which uniquely
identifies a particular bank branch in India.
Q32. What are the objectives of SLR?
Ans. Objectives of SLR:
 To restrict expansion of banks credit.
 To increase banks investment in approved securities.
 To ensure solvency of banks.
Q33. How many types of subsidiaries does RBI have?
Ans. RBI has two types’ subsidiaries
 Fully owned subsidiary
 Majority stack subsidiary
Q34. Name the fully owned subsidiaries of RBI?
Ans. RBI has three fully own subsidiaries:
 National Housing Bank(NHB)
 Deposit Insurance and Credit Guarantee Corporation
of India(DICGC)
 Bharatiya Reserve Bank Note Mudran Pvt.
Ltd.(BRBNMPL)
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Q35. Name some negotiable instruments.
Ans. The negotiable instruments include
 promissory note
 bill of lading
 Bank draft/ pay order/bankers cheque.
 Railway receipts
 Dock warrant
 Warehouse receipt
 Certificate of deposit
 Commercial paper
 Treasury bills
 Hundi
Q36. What are the features of Negotiability?
Ans. Features of Negotiability:
 Freely transferable by delivery (when it is bearer).
 Freely transferable by endorsement (when it is an
order instrument).
 The transferee taking the instrument in good faith.
Q37. What is Promissory Note (PN)?
Ans. It’s an instrument in writing which contains an
unconditional undertaking signed by the maker to pay a
certain sum of money to the order or the bearer of
instrument. The Promissory Notes require being stamped
ad per Indian Stamp Act.
Q38. How many types of Promissory Notes are there?
Ans. Types of Promissory Note:
 Demand Promissory Note - The Promissory Note
which is payable immediately on demand is called
“Demand Promissory Note”.
 Usance Promissory Note - The Promissory Note which
is payable after a predefined definite period is called
“Usance Promissory Note”.
Q39. How many parties are required in Promissory
Notes?
Ans. Basically it requires two parties. The one is maker
who promises to pay and the other is payee to whom it is
payable. For example a person take loan from the bank
then the “person” is the “maker” and “the bank” is “payee”.
Q40. What is “Money Laundering”?
Ans. The process of converting illegal money into legal
money is Money Laundering. According to Section 3 of the
Prevention of Money laundering Act 2002 as: “Whosoever
directly or indirectly attempts to indulge or knowingly
assists or is involved in any process or activity connected
with the proceeds of crime and is projecting it as the
untainted property shall be guilty of the offence of money
laundering”.
Q41. What are the common factors of “Money
Laundering”?
Ans. Generally there are four factors of money laundering:
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 The true ownership and real source of money is not time of customer’s standing in queue. The products of
revealed. EFTS includes:-
 The launderers change the form of the proceeds in  WTs- wireless transfers.
order to shrink the huge volume of cash generated by  ATM- Automated Trailer Machine
the initial unlawful activity.  CDs- Cash Dispensers
 The trail left by the process is not known so that it  POS- Point of Sale terminals
make it difficult to follow the money from the  Home banking
beginning to end.
 Constant control is maintained on the money. Q47. What is “Smart Card”?
Ans. The Smart Card is an Integrated Circuit Card (ICC) to
Q42. What are the stages of “Money Laundering” store information. It is a cash card or we can say ‘electronic
process? purse’ which is a pre-paid cash card. The card provides an
Ans. The following are the stages of “money laundering” option to the customers for debit and credit facilities.
process: 1. Placement stage:-It is the first introduction of These cards can be reloaded by ATM or by telephone. It
entry for funds derived for any criminal activities. 2. reduces the need of carrying cash for shopping and
Layering/Agitation stage: - The object of this stage is to enables the card holder to increase the amount at any
prevent the tracing of illegal proceed. It creates a complex time.
network of transactions which attempts to not reveal the
link between the initial entry and the end of the money
laundering cycle. 3. Integration stage: - This process
achieves the appearance of total legitimacy of funds
thereby it refers to the return of funds to the legitimate
economy for later extraction.
Q48. What is “Credit Card”?
Q43. Give few ways of “Money Laundering”?
Ans. It is an instrument of payment. The customer gets
Ans. Following are the few ways of money laundering:-
some credit on the card which he can use for shopping,
 Frequent exchange of cash into other currencies.
ticket booking, encashment etc. The credit cards are of
 Large withdrawals from inactive account.
different types having different credit limits depending
 Transferring large sum of money to or from abroad.
upon the bank.
 More use of safe deposit facilities.
 Customer having several accounts in different banks
Q49. What is “Debit Card”?
but in same location.
Ans. It is a payment card used to obtain cash, purchasing
goods and services automatically debiting the payment to
Q44. What is “Digital Signatures” (DS)?
the card holder’s bank account.
Ans. Digital Signature is used for security purpose and it is
equivalent to the handwritten signature. It is a signature in
Q50. What are the advantages of “Debit Card”?
electronic form attached to an electronic record. Digital
Ans. The advantages of Debit Card:
signature identifies the origin of the message and maintain
 No need to carry cash.
the integrity of message. It defines authentication of an
 Quick and less complicated than using cheque.
electronic record by a person whose name the digital
 Used for withdrawal of cash.
signature certificates. In India Information Technology Act
 It can be issued to any individual having bank account
2000 considers digital signature as personalized thumb
print.
Q51. What is Inflation?
Ans. The rise in the prices of goods or service in an
Q45. What is “Mobile Banking”?
economy over a certain period of time is known as
Ans. Mobile banking provides us the ease of carrying out
inflation.
certain banking transactions through their mobile phone.
This facility is provided by the banks. Many operations can
be performed by using mobile banking like checking
account balance, other account etc Q52. Name the types of “Inflation”?
Ans. Following are the types of inflation:-
Q46. What is “Electronic Fund Transfer System”  Wage inflation
(EFTS)?  Price power inflation
Ans. Electronic fund transfer provides us to transfer fund  Cost-push inflation
electronically replacing the paper instruments. The  Sectorial inflation
electronic fund transfer is fast and easily available. It saves  Stagflation
 Mild inflation
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 Hyper-inflation
Q53. What are the effects of “Inflation”?
Ans. Following are the effect of inflation:-
 It decreases the real value of money
 It discourage investment and savings
 It leads to shortage of goods
 Mitigate economic recessions
 Reduces the level of debt
Q54.What is PAN number and where we can use PAN
number?
Ans. A PAN is a 10 character alphanumeric number
allotted to a tax payer who is eligible to file the income tax
return. The PAN number is used for the following financial
transactions:
 Sale or purchase of any immovable property valued 5
lac or more.
 Sales or purchase of Motor Vehicle or Vehicle.
 One time deposit exceeding Rs. 50000 with banking
company.
 A contract of value exceeding Rs. 10 lac for sale or
purchase of securities.
 Opening an account with a banking company.
Types of Bank Accounts in India (Deposit Accounts)
Traditionally banks in India have four types of deposit
accounts, namely Saving Banking Accounts, Current
Accounts, Recurring Deposits and, Fixed Deposits.
1. Saving Account - Saving accounts are opened to
encourage the people to save money and collect their
savings. The saving account holder is allowed to withdraw
money from the account as and when required. The
interest on Saving Bank Accounts was fixed by RBI and it
was fixed at 4.00% on daily balance basis. RBI has
deregulated Saving Fund account interest rates and now
banks are free to decide the same within certain conditions
imposed by RBI.
Features of Saving Accounts –
 There is no restriction on the number and amount
of deposits. However, in India, mandatory PAN
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(Permanent Account Number) details are required
to be furnished for doing cash transactions
exceeding र50,000.
 Withdrawals are allowed subject to certain
restrictions.
 A minimum amount has to be kept on saving
account to keep it functioning.
2. Current Account - Current Accounts are basically
meant for businessmen and are never used for the purpose
of investment or savings.
Features of Current Accounts –
 The main objective of Current Account holders in
opening these account is to enable them (mostly
businessmen) to conduct their business
transactions smoothly.
 There are no restrictions on the number of times
deposit in cash / cheque can be made or the
amount of such deposits;
 Usually banks do not pay any interest on such
current accounts.
 The current accounts do not have any fixed
maturity as these are on continuous basis
accounts.
 Cheque book facility is provided and the account
holder can deposit all types of the cheques and
drafts in their name or endorsed in their favor by
third parties.
3. Recurring Deposit Account:
Recurring Deposit is a special kind of Term Deposit offered
by banks in India popularly known as RD accounts 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.
Features of RD Accounts
 Recurring Deposit accounts are normally allowed
for maturities ranging from 6 months to 120
months
 These accounts can be opened in single or joint
names. Nomination facility is also available.
 Rate of Interest offered is similar to that in Fixed
Deposits.
 Interest is compounded on quarterly basis in
recurring deposits.
4. Fixed Deposit Account (FD) –
The account which is opened for a particular fixed period
(time) by depositing particular amount (money) is known
as Fixed (Term) Deposit Account. The term 'fixed deposit'
means that the deposit is fixed and is repayable only after
a specific period is over. Under fixed deposit account,
money is deposited for a fixed period say six months, one
year, five years or even ten years. The money deposited in
this account cannot be withdrawn before the expiry of
period.
Features of FD Accounts –
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  The main purpose of fixed deposit account is to
enable the individuals to earn a higher rate of
interest on their surplus funds (extra money).
 The amount can be deposited only once. For
further such deposits, separate accounts need to
be opened.
 Fixed Deposit Account may be opened for a
minimum period of 7 days and maximum period
of 10 years.
 The minimum amount required to open a Fixed
allowed. However, in case of emergency, banks
allow to close the fixed account prior to maturity
date. In such cases, the bank deducts 1%
(deduction percentage many vary) from the
interest payable as on that date.
5. About (BASIC SAVING BANK DEPOSIT ACCOUNT):
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". ii. The aim of introducing
'Basic Savings Bank Deposit Account' is very much part of
the efforts of RBI for furthering Financial Inclusion
objectives.
Main Points of BSBDA-Small Accounts:
In BSBDA, banks are required to provide free of charge
minimum 4 withdrawals, through ATMs Total credits in
such accounts should not exceed 1 lakh rupees in a year.
Maximum balance in the account should not exceed 50,000
Rs at any time The total of debits by way of cash
withdrawals and transfers will not exceed 10,000 rupees
in a month Foreign remittances cannot be credited to
Small Accounts without completing normal KYC
formalities Small accounts are valid for a period of 12
months initially which may be extended by another 12
months if the person provides proof of having applied for
an Officially Valid Document.
6. ATMs: (Automated Teller Machine):
The ATM debit cards, credit cards and prepaid cards (that
permit cash withdrawal) issued by banks can be used at
ATMs for various transactions.
Use of ATMs of Other Banks:
5 free transactions are permitted per month (inclusive of
financial and/or non-financial) at other bank ATMs for
Savings Bank Account holders. For transaction beyond this
minimum number of transactions, banks charge maximum
of Rs 20/ - per transaction. Reserve Bank of India reduced
free usage of other bank automated teller machines
(ATMs) to 3 per month from 5 from November, in six
metropolitan cities - Delhi, Mumbai, Chennai, Bangalore,
Kolkata and Hyderabad.
Reconciliation of failed transactions at ATMs
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The time limit for resolution of customer complaints by the
issuing banks shall stand reduced from 12 working days to
7 working days from the date of receipt of customer
complaint. Accordingly, failure to recredit the customer’s
account within 7 working days of receipt of the complaint
shall entail payment of compensation to the customer @
Rs. 100/- per day by the issuing bank.. Any customer is
entitled to receive such compensation for delay, only if a
claim is lodged with the issuing bank within 30 days of the
date of the transaction. All disputes regarding ATM failed
transactions shall be settled by the issuing bank and the
acquiring bank through the ATM system provider only.
WHITE Label ATMs: ATMs which are owned and
operated by non-banking companies are called White
Label ATMs. Note: RBI authorised four entities to operate
as WLAs namely Tata Communications Payment Solutions,
Prizm Payment Services Pvt. Ltd, Muthoot Finance Limited
and Vakrangee Ltd. Personal Identification Number (PIN) :
A Personal Identification Number is a secret numeric
password shared between user and a system that can be
use to authenticate the user to the system.
IFSC (Indian Financial System Code):
Indian Financial System Code is an alpha-numeric code
that uniquely identifies a bank-branch participating in the
NEFT system. ii. 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. iii. 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. For ex: SBIN0015986 : i. First 4 character SBIN –
refers to State Bank of India. ii. 0 is a control number. iii.
last six characters (015986) represents the SBI branch Jail
Road, Hari Nagar New Delhi.
MICR (Magnetic Ink Character Recognition):
MICR stands for Magnetic Ink Character Recognition. MICR
Code is a 9 numeric digit code which uniquely identifies a
bank branch participating in the ECS Credit scheme. MICR
code consists of 9 digits e.g 400229128 i. First 3 digits
represent the city (400) ii. Next 3 digits represent the bank
(229) iii. Last 3 digits represent the branch (128) Note:
The MICR Code allotted to a bank branch is printed on the
MICR band of cheque leaves issued by bank branches.
Cheque Truncation:
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Truncation is the process of stopping the flow of the  If one is aggrieved by the decision, one may,
physical cheque issued by a drawer at some point with the within 30 days of the date of receipt of the award,
presenting bank en-route to the drawee bank branch. In its appeal against the award before the appellate
place an electronic image of the cheque is transmitted to authority.
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
Deposit insurance and credit guarantee corporation
speeds up the process of collection of cheques resulting in
(DICGC)
better service to customers, reduces the scope for clearing-
All commercial banks including branches of foreign banks
related frauds or loss of instruments in transit, lowers the
functioning in India, local area banks and regional rural
cost of collection of cheques, and removes reconciliation-
related and logistics-related problems, thus benefitting the banks are insured by the DICGC. Note: Primary cooperative
societies are not insured by the DICGC.
system as a whole.
DICGC insure: DICGC protects bank deposits that are
payable in India.
Bancassurance: The sale of insurance and other similar
The DICGC insures all deposits such as savings, fixed,
products through a bank. This can help the consumer in
current, recurring, etc. except the following types of
some situations; for example, when a bank requires life
deposits.
insurance for those receiving a mortgage loan the
(i) Deposits of foreign Governments;
consumer could purchase the insurance directly from the
(ii) Deposits of Central/State Governments;
bank.
(iii)Inter-bank deposits;
Banking Ombudsman Scheme 2006: (iv) Deposits of the State Land Development Banks with
the State co-operative bank;
The Banking Ombudsman Scheme enables an expeditious
(v) Any amount due on account of any deposit received
and inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks. outside India
(vi) Any amount, which has been specifically exempted by
The Banking Ombudsman is a senior official appointed by
the corporation with the previous approval of Reserve
the Reserve Bank of India to redress customer complaints
Bank of India.
against deficiency in certain banking services. All
Maximum deposit amount insured by the DICGC - Each
Scheduled Commercial Banks, Regional Rural Banks and
depositor in a bank is insured up to a maximum of
Scheduled Primary Co-operative Banks are covered under
Rs.1,00,000 (Rupees One Lakh).
the Scheme.
Credit Information Bureau (India) Limited: is India’s first
Credit Information Company (CIC) founded in August
Other Important Points:
2000. CIBIL collects and maintains records of an
 The Banking Ombudsman does not charge any fee
for filing and resolving customers’ complaints. individual’s payments pertaining to loans and credit cards.
Headquarter – Mumbai
 The amount, if any, to be paid by the bank to the
complainant by way of compensation for any loss
suffered by the complainant is limited to the
amount arising directly out of the act or omission
of the bank or Rs 10 lakhs, whichever is lower.
 The Banking Ombudsman may award
compensation not exceeding Rs 1 lakh to the
complainant only in the case of complaints Coins in India
relating to credit card operations for mental agony
and harassment. Coins: The Government of India has the sole right to mint
 If a complaint is not settled by an agreement coins. The designing and minting of coins in various
within a period of one month, the Banking denominations is also the responsibility of the
Ombudsman proceeds further to pass an award. Government of India. Coins are minted at the four India
Before passing an award, the Banking Government Mints at Mumbai, Alipore (Kolkata), Saifabad
Ombudsman provides reasonable opportunity to (Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP).
the complainant and the bank, to present their
case. Denominations: Coins in India are presently being issued
 If one is not satisfied with the decision passed by in denominations of one rupee, two rupees, five rupees
the Banking Ombudsman, one can approach the and ten rupees. Note: Coins can be issued up to the
appellate authority against the Banking denomination of Rs.1000 as per the Coinage Act, 1906.
Ombudsmen’s decision. Appellate Authority is
vested with a Deputy Governor of the RBI. Currency in India
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Currency: Banknotes in India are currently being issued in
the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs500,
and Rs1000. These notes are called banknotes as they are
issued by the Reserve Bank of India (Reserve Bank).
Note: The printing of notes in the denominations of Rs 1,
Rs 2 and Rs 5 has been discontinued as these
denominations have been coinised.
Bank Notes in India
Contemporary Currency notes have 15 languages on the
panel which appear on the reverse of the note.
Soiled Notes: Soiled notes are those which have become
dirty and slightly cut. Notes which have numbers on two
ends, i.e. notes in the denomination of Rs.10 and above
which are in two pieces, are also treated as soiled note.
The cut in such notes, should, however, not have passed
through the number panels.
Mutilated Notes: Notes which are in pieces and/or of
which the essential portions are missing can also be
exchanged. Essential portions in a currency note are name
of issuing authority, guarantee, promise clause, signature,
Ashoka Pillar emblem/portrait of Mahatma Gandhi, water
mark.
Imperfect banknotes: Imperfect banknote means any
banknote, which is wholly or partially, obliterated, shrunk,
washed, altered or indecipherable but does not include a
mutilated banknote.
Security Features of Indian Banknotes
 Watermark
 Security Thread
 Latent Image
 Micro lettering
 Intaglio
 Identification Mark
 Fluorescence
 Optically Variable Ink
 See through Register
 Legal provisions against counterfeiting
Some Important Tips which you have to keep in your
mind while going for Interview.
1. Tips on Preparing for the Interview-Day:
i. Gather information about the bank or organization that
has invited you for the interview. This will give you a clear
idea about the philosophy, work environment and
reputation of the company.
ii. Read the job description carefully as to what they expect
from you. iii. Evaluate your qualifications, experience, and
core competences, areas of strength and accordingly draw
up a questionnaire along with your replies to the expected
questions.
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2. Brush up your communication skills.
i. Interviewers normally ask you to highlight your
strengths and weaknesses.
ii. Strengths of course can be emphasized more easily but
even the weaknesses can be presented in a positive light.
For example, ‘I am a little impatient with the people who
are not focused enough, or non-serious about the work in
hand’ iii. Go with a positive frame of mind, without
worrying much about the outcome.
3. Attending the Interview:
Go with a smile (not a grin) on your face, with confidence
and determination to succeed in your heart.
4. As You Enter:
i. Depending upon whether you are being interviewed by
one person or a panel of interviewers, greet politely ‘Good
Morning’/Afternoon or Evening depending upon time of
the day.
ii. If there are more than one person then address them as
‘Sirs/Madams’ and try to encompass them all in your
greeting. If there is only one lady in the panel, it is polite to
greet her separately.
iii. Most probably you will be offered a seat. Do not sit
down unless you are asked to.
5. Facing the Interviewers
i. As you sit across the interviewer(s), look confident and
relaxed.
ii. In most cases the interviewers themselves will try to put
you at ease.
6. The Body Language
i. Good body language can be inculcated and practiced.
Your facial expression, appearance, gestures, how you
walk, talk, stand, sit, use your limbs etc. all form part of
your body language.
7. Pay attention to the following.
 Sit straight comfortably without craning your
neck. Do not slouch.
 Look attentive, keen and interested.
 Talk clearly, maintaining a pitch that is
comfortably audible to the person(s) around.
 Do not get overexcited even while describing your
achievements and strengths.
 Listen to the queries attentively, constantly
maintaining polite eye contact with the
interviewers.
 Nod your head to show that you are listening,
interjecting appropriately with ‘Yes Sir/Madam’,
absolutely, definitely etc.
 Lean forward a little as you speak and backward
as you listen.
 Do not touch your face, or shake your legs.
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  Keep your arms either on your sides or in your  Do not show your disappointment and disinterest.
lap. Do not fold your arms, as it is a sign of Maintain your poise till the end.
rudeness.  Always thank the interviewers as you leave.
 Use short simple sentences while talking.
 Do not make unrealistic tall claims during the
interview.
 Never get too arrogant or aggressive in front of
the interviewers.

All the best from

BA Family

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Important
Banking
Questions for
Bank Jobs
Interviews
Perfect for SBI Clerk, IBPS PO, IBPS Clerk and All
the Banking Interviews

Publication Date – 25th Nov, 2014

Edited by – Team ExamPundit

 1. What do you know by stale cheque?- When the cheque becomes out of date and cannot be
encashed, it is termed as stale cheque. For example, the validity period of any cheque is three
months and when a cheque dated: 10.01.2012 is presented for payment on 10.01.2013, it is
considered as a stale cheque, since the cheque is more than three months old.

2. What do you mean by post dated cheque?- When the date of the cheque is beyond the date on
which the cheque is presented for payment, the cheque is considered to be post dated. For
example, when a cheque dated: 10.02.2013 is presented for payment on 10.01.2013, it is
considered to be a post dated cheque.

3. What do you know by current chest? - Currency chests are operated by RBI so that they can
provide good quality currency notes to the public. However, RBI has appointed commercial banks
to open and monitor currency chests on behalf of RBI. The cash kept in currency chests is
considered to be kept in RBI and

4. What is meant by minimum balance to be maintained in the accounts? In the case of

savings bank and current account deposits, the banks stipulates a minimum balance to be
maintained. The minimum balance varies from bank to bank and when the balance in the account
falls below the minimum balance then banks debit the account with some penal charges. Some
banks insist quarterly average minimum balance to be maintained instead of regular minimum
balance to be maintained.

5. What do you mean by tax deduction at source? TDS means tax deducted at source. Banks must
deduct tax from the interest paid on the fixed deposit when the interest paid on fixed deposits
to a customer exceeds Rs. 10000/- during the accounting year. TDS is applicable to fixed deposits
only and is applicable to savings bank deposits.

6. What do you mean by weaker sections? - The following categories are termed as weaker
sections namely - small business enterprises; marginal farmers; artisans/village and cottage
industries for whom loans are granted upto Rs. 50000.00; SGSY beneficiaries; SC/ST
beneficiaries; DIR beneficiaries; SJSRY beneficiaries; SLRS; self help groups and people belonging to
minority community.

7. What do you know by MICR? - MICR means magnetic ink character recognition. Nowadays,
the cheques are issued in MICR formats in metropolitan centres namely; Mumbai, Chennai,
Kolkata, Bangalore etc. The MICR code is readable by a reader sorter computer which helps in
quick sorting of the cheques towards immediate adjustment of the amount to be received and paid
by the banks in the clearing house. MICR code consists of the following namely; the cheque
number, name of the city, name of the bank, name of the branch, account category etc. and banks
simply type the amount of the cheque in the MICR portion using scanners so that the sorter
reader is able to read the entire information in regard to the cheque instantaneously.

8. What do you mean by cheque truncation? - Under cheque truncation, the physical cheque is
replaced by the digital image of the cheque after scanning. Once the cheque is truncated the
physical cheque is cancelled and from the moment of truncation only the digital image has life.
The digital image of the cheque which contains the digital signature of a bank officer as to its
authenticity is processed by all banks and payment is effected. Cheque truncation helps in quick
processing of the cheques drawn even on far away places since there is no necessity to physically
move the cheque from one place to another place.

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 9. What do you mean by ECS?- ECS means electronic clearing service and this facility is used
where a large number of small value payments or receipts are to be made or received. ECS can
be used for either debit transactions or credit transactions. When a company wants to pay
dividends to large number of shareholders, they use ECS credit facility and by debiting the
company's account, the shareholders accounts are credited with the dividend amount
instantaneously. Similarly when an accountholder can use ECS debit facility towards effecting
payment to telephone charges each month.

10. What do you mean by bank assurance? Hither to banks were dealing with acceptance of
deposits and lending loans to the customers apart from undertaking certain ancillary services.
Nowadays banks started selling insurance policies of prominent insurance companies by having
tie up arrangements with such companies and banks earn commission for such transactions.

11. What do you mean by Universal banking? - Universal banking is the concept under which
banks can provide various types of services namely; deposits, loans, safe deposit lockers, safe
custody services, dealing with mutual fund schemes, selling insurance policies, selling gold coins,
dealing with issue of shares and debentures etc. Thus at present banks are becoming like a
supermarket for all kinds of financial products and such concept is called as universal banking.

12. What do you mean by Regional Rural Banks? - The Regional Rural Banks are relatively new
banking institutions which were added to the Indian banking scene since October, 1975. The
distinctive feature of a rural bank is that though it is a separate body corporate with perpetual
succession and common seal, it is very closely linked with the commercial bank which has
sponsored the proposal to establish it.

13. What do you mean by National Housing Bank?- National Housing Bank was established under
the National Housing Bank act, 1987 as an apex body and the key function of National Housing Bank
is the development of the housing sector and it is a wholly owned subsidiary of Reserve Bank of
India. National Housing Bank undertakes the following activities namely; promotion and
development of housing finance companies; regulation and supervision of housing finance
companies and providing both direct finance and indirect finance to housing sector.

14. What do you mean by NABARD? - National Bank for agriculture and rural development was
set up in 1982 as an apex development bank in the field of agricultural finance and rural
development. NABARD is set up by the Government for the purpose of facilitating credit flow
for promotion and development agriculture and integrated rural development. It covers
supporting all other allied economic activities in rural areas, promoting sustainable rural
development and ushering in prosperity in the rural areas.

15. What do you mean by EXIM Bank? - Export and Import Bank of India was set up during the
year, 1982 for the purpose of financing, promoting and facilitating foreign trade in the country. It
is wholly owned by the Government of India. The bank apart from enhancing exports from the
country, integrates the country's foreign trade and investment with the overall economic growth.

16. What do you mean by SIDBI? - SIDBI was established for the purpose of assisting and
promoting small scale industry. It was established on 2.4.1990. It is the principal financial
institution established for the promotion, financing and development of industry in the small scale
sector and to coordinate the functions of the institutions engaged in the promotion and financing
or developing industry in the small scale sector.

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 17. What do you mean by NBFCs? - Non Banking Finance Companies provide finance for small
ventures but at the same time they are more customer oriented and operate at low volumes
compared to the banks. They also collect deposits from customers and offer slightly higher
interest rates on deposits compared to the banks.

18. What do you mean NEFT and RTGS - The two options namely - national electronic funds
transfer and RTGS - real time gross settlement offered by Reserve Bank of India allow electronic
transfer of funds from the remitter who has an account in one bank to the beneficiary who has
account in any other bank/branch. The transfer can be carried out using the internet banking
facility. The minimum amount that can be transferred by RTGS is Rs. 2.00 lakh and there is no such
limit for transfer through NEFT. It is settled in batches at times defined by the Reserve Bank of India.
RTGS transactions are settled continuously as and when they are put through. The transfer of funds
through NEFT and RTGS can also be carried out by submitting the remittance form at the remitter's
bank branch.

19. What do you mean IFSC code? - IFSC means Indian financial system code. It is a eleven digit
code to identify the bank branch. IFSC code is used while transferring the funds using RTGS and
NEFT payments.

20. What do you mean by financial inclusion? In spite of vast growth in the banking system, a large
number of poor people are still not served by any bank. They are living outside the purview of
any bank. Financial inclusion is delivery of financial services at an affordable cost to the vast
population of disadvantaged/low incomes sections of the society

21. What do you mean No frill accounts? No frill accounts are accounts with very low or nil
minimum balance as well as charges to be opened by the banks as targeted by Reserve Bank of
India. KYC norms are relaxed for opening no frill accounts so that people living in rural and semi
urban areas can open the accounts conveniently. Overdrafts upto Rs. 25000.00 are allowed in the no
frill accounts

22. What do you mean by narrow banking? - It is the system of banking under which the bank
accepts deposits from the public and places the funds accepted in 100 percent risk free assets
with maturity matching for its liabilities. The bank takes no risk of lending at all.

23. Who are business facilitators and business correspondents? - RBI has permitted the banks to
use the services of business facilitators and correspondents with effect from 2006. The services of
non-governmental officers, microfinance institutions and civil society organizations can be
utilized by the banks. They help the banks in identifying the borrowers processing their
applications etc. without involving in business transactions. No approval of RBI is necessary.
Correspondents will do all the above and will also participate in business transactions in a small way.

24. What do you mean by non performing assets? - Non performing assets means bad loans.
When the principal and interest in the account becomes overdue for more than 90 days, it is
treated as non performing assets. Non performance assets are classified into sub standard assets,
doubtful assets and loss assets. Banks are willing to keep the level of non performance accounts at
the lowest.

25. What do you mean by priority sector advance? - In order to boost development of agriculture
and industries, Government of India has stipulated certain norms under which banks are in a
position to allocate 40 percent of their advances exclusively to certain categories of borrowers
called as priority sector advances. The following are classified into priority sector advances namely

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 - retail traders, small business, professional and self employed; agriculture; small scale
industries, self help groups, differential rate of interest and SC/ST beneficiaries

26. What do you mean by merchant banking? - Merchant banking stands for provision of
various services to corporate clients by helping them to access capital market. Merchant
banks help the corporate customers to approach the capital market with initial public offers
for the purpose of collection of capital by way of shares.

27. What do you mean by demat accounts? Demat means dematerialization. During the early days,
shares and debentures certificates were issued in physical form in the form of certificates. At
present, they are issued in electronic form. It is the process by which paper securities are
converted to electronic form so that they can be stored, sold and transferred easily.

28. What is a depository? - A depository holds the securities of the investors in electronic form.
In our country there are two depositories namely; NSDL - National Securities Depositories
Limited promoted by National Stock Exchange and CDSL - Central Depository Services Limited
promoted by Bombay Stock Exchange.

29. What do you know by consortium financing? When a corporate is in need of huge finance - say
Rs. 200 crores and above, banks join together and extend the loan facilities by sharing the loan
amount between themselves. This reduces the risk for each bank. The banks jointly process the
application of the borrower and sanction the advance and this is called consortium lending.

30. What do you mean by repo rate? - It is the rate at which RBI lends short term funds to the
commercial banks against securities. In order to temporarily expand the money supply, the
central bank decreases repo rates enabling the banks to swap the government securities for cash.
Repo is the abbreviation of Repurchase and to contract the money supply RBI increases the repo
rates.

31. What do you mean reverse repo ? - The reverse repo rate is the interest rate that banks
receive if they deposit money with the central bank. This reverse repo rate is always lower than the
repo rate. Increases or decreases in the repo and reverse repo rate have an effect on the interest
rate on banking products such as loans, mortgages and savings.

32. What do you mean by CRR? - CRR means Cash Reserve Ratio and as per the stipulations by
Reserve Bank of India, all banks are in a position to maintain a certain percentage of their
deposits (technically called as net demand and time liabilities) in their account with the RBI. CRR
ranges from 5 percent to 15 percent. By increasing CRR by merely 0.25 percent, an amount of Rs.
15000 crores of liquid funds can be transferred from the commercial banks to the coffers of RBI.
When CRR is reduced, the liquid funds are transferred from RBI to commercial banks.

33. What do you mean by SLR? - Statutory Liquidity Ratio refers to the stipulation by RBI that
approximately 25 percent of the banks deposits is to be kept in the form of government securities,
gold and cash. Primarily SLR refers to the amount invested by the banks in Government of India
securities. RBI has the right to change the statutory liquidity ratio from time to time. On reduction
of SLR, the availability of funds for the banks moves up and banks tend to more loans to the
common public. In the case of increase in SLR, banks reduce bank lending.

34. What do you mean by PLR? - Prime lending rate is the rate at which commercial banks are
willing to lend to their triple A rated No 1 borrowers. The lending rates by the bank for other

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 borrowers whose credit worthiness is low will be more than prime lending rate. RBI has
deregulated the lending rates that are to be charged by the banks for advance above Rs. 2 lakhs.

35. What do you mean by BPLR? - It is the rate at which commercial banks must charge to all
their advances less than Rs. 2 lakhs.

36. Who is a non resident Indian? - Non resident Indian is the person who is the Indian citizen
who is residing in abroad for more than 182 days and has gone for abroad for the purposes
namely; business, studies and employment.

37. What are the different types of accounts that can be opened by Non Resident Indians? - Non-
resident ordinary account, Non-resident External account, FCNR account and RFC account.

38. What are the different currencies in which FCNR accounts can be opened? - FCNR accounts
can be opened in the following currencies namely; US dollar, pound sterling, Euro, Australian
dollar, Japanese Yen and Canadian dollar. FCNR accounts can be opened for a minimum period of
one year and maximum period of three years

39. What are the traditional functions of RBI? - The traditional functions of RBI are - issue of
currency, forex management, export assistance, clearing house functions, change of currency,
transfer of currency, publication of statistics and other information and training in banking.

40. What are the developmental functions of RBI? - The developmental functions of RBI are -
agriculture development, promotion of industrial finance, promotion of export through
refinance, development of bill market, development and regulation of banking system.

41. What are the regulatory functions of RBI? - The regulatory functions of RBI are – qualitative
credit control, bank rate, differential rate of interest, open market operations, Maintenance of
CRR and SLR, direct action, credit authorization scheme and moral persuasion

42. What are the different types of financial institutions in our country? - The various financial
institutions in our country are - RBI - Reserve Bank of India; SEBI - Securities and Exchange Board
of India and IRDA - Insurance Regulatory and Development Authority of India. RBI monitors the
various banks in the country; SEBI monitors and regulates capital markets and IRDA monitors the
functions of insurance companies.

43. What are the different types of banks in our country? - In our country the following banks are
available - savings banks; commercial banks; industrial banks; development banks; land
development banks; indigenous banks; central bank; cooperative banks; exchange banks and
consumer banks

44. What are the different types of secondary functions of any bank? - They are agency or
representative functions; general utility services and social development functions.

45. What do you mean by agency or representative functions of any bank? - They are collection
and payment of various items; purchase and sale of securities; trustee and executor; remitting
money; purchase and sale of financial exchange; letter of references and other agency functions.

46. What are the general utility services offered by the banks? - They are locker facilities;
business information; help in transportation of goods; acting as a referee; issuing of letters of
credit; acting as underwriters; issue of traveler cheques; issue of gift cheques and dealing in
merchant banking activities

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 47. What are the social development functions of a bank ? - They are capital formation;
inducement to innovations; impact on the rate of interest; role on the development of rural
sector; helping in pushing up the demand

48. Can you name some items which are covered under negotiable instruments act? - They are
promissory notes, bills of exchanges; cheques, exchequer bills; circular notes; dividend warrants;
share warrants; bearer debentures; bank notes and bank drafts

49. What is a Payment Bank? - Payment Bank is a entity which will allow you to open Savings and
Current Account like the other Banks. However, the difference is that a Payment Bank can be your
mobile operator or supermarket chain(eg. Big Bazar) or even a NBFC.

50. What Makes Payment Banks Different From Normal Banks? - Payment Banks helps the
customer to handle cash a lot easier by providing privileages like transferring money from your
Mobile Phones to any bank account or another mobile phone customer and also you can recieve the
money similar way. The added advantages are paying bills, paying at the Shopping Retailers and
recharges etc.

51. Why Payment Banks? - India has a vast growing Mobile Users Database with over 91 Crore
customers. So basically providing the service will increase the Financial Inclusion Programme.
Basically it will help the citizen a lot on the other hand it will boost up the financial inclusion.

Facts On Payment Banks

 Payment Banks will give an interest to the customer's account each year similar like Banks.
 The only thing Payment Banks will note provide is Giving Out LOANS.
 The RBI has stipulated that every payments bank must have an equity capital of 100 crore to
start off and maintain a capital adequacy of 15 per cent. Apart from these, it will need to
meet cash reserve requirements and needs to invest in specific securities to meet the
statutory liquidity ratio. All these amounts are to be invested in government securities or
treasury bills. Promoter’s holding must be at least 40 per cent for the first five years, and
eventually reduced to 26 per cent over 12 years.
 NACHIKET MORE COMMITTEE is the officially appointed Committee which recommended
Payment Banks to increase the Financial Inclusion Programme.
 Nachiket More Committee is also known as ‘Committee on Comprehensive Financial
Services for Small Businesses and Low-Income Households’.
 Speculations as of 13th August, 2014 are that Western Union, Bharti Airtel, Vodafone are
interested in Payment Banks. It is said that Bharti Airtel is teaming up with State Bank of
India to set up Payment Banks.

History of ATMs and White Label ATMs(WL-ATM/WLA)

 The first bank who produced ATM was HSBC in the year 1987 in Mumbai. After that ATM has
been installed in many places. But the problem occurred when RBI noticed that the
installation of ATMs have not been initiated in the Rural areas of India. Although SBI or State

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 Bank of India has the largest ATM network, yet the rural areas are neglected. Mainly the
Urban and Developed areas had the most ATMs. You will notice more ATMs in Shopping
Malls, Movie Theatres, Sports Arena, Entertainment Parks but less in Rural areas, villages.
This has affected the Financial Inclusion program.
 To increase the Financial Inclusion, RBI issued guidelines for Non-Banking Financial
Companies to set up White Label ATMs or WL-ATM.
 Usually we have seen ATMs with Bank's Logo in it, making it sure that the bank has installed
the ATM in that location. But White Label ATMs does not have any Bank logo in it. It is
installed by any Non-Banking Entity.

52. How does White Label ATM work? - It is like the outsourcing of bank's payment service. Earlier
bank's had to install ATMs using their Logos and security and other maintenance staffs. But with the
White Label ATMs banks now only need to fill the White Label ATMs with cash. Suppose a NBFC
named XYZ Ltd. opens a White Label ATM with the name "ABC". Now they will have a bank as
sponsor. Suppose MNO Bank is the sponsor. So now, XYZ will install and set up their White Label
ATMs and keep the maintenance staff and securities while MNO Bank will make sure the White
Label ATMs are having sufficient cash. The outcome of this system is that banks now will not need to
worry about maintenance and other things.

53. Do White Label ATMs charge the customer? - No, as per RBI guidelines they cannot charge the
customers directly. However, they charge from banks and the banks charge it from Customer's
account.

54. Summary of White Label ATM - Basically the main motive is to increase the financial inclusion.
As the NBFCs has to install White Label ATMs in a ratio of 1 Urban White Label ATM is to 2 Rural
White Label ATMs. So when they try to install 1000 White Label ATMs in a Urban Location they will
have to install 2000 White Label ATMs in the Rural Areas. It will increase the Rural participation in
Financial Inclusion.

Facts

 IndiCash of Tata Communications Payment Solution Limited(TCPSL) was the first White Label
ATM in India.
 More than 15 companies including Tata, Muthoot, Prizm Payments, Srei Infra., Vakgrangee
Software, AGS have been given permission of White Label ATMs by Reserve Bank of India.
 Any NBFC or any non-bank entity with a minimum net worth of Rs.100 crore can apply for
White Label ATMs. However it is completely on RBI whether they will give permission or not.
 The 5 transactions are free on a monthly basis but after that the White Label ATMs will
charge 15 rs per transaction and 5 rs per balance inquiry. These charges will later reflect on
the customer's bank account statement.

All the Best. Visit www.exampundit.in for more PDF materials

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 Top 50 Banking
Interview Questions
Basic Questions on Banking Industry for IBPS and SBI Interviews

Powered by

www.Gr8AmbitionZ.com
your A to Z competitive exam guide
 1. Why do you want to enter banking?
Banking is one of the fastest growing sectors in India with more stable and high

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growth and more over providing wide range of career opportunities for graduates.
So I want to take an opportunity to join in a bank.

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2. What is the difference between Cheque and Demand Draft?
Both are used for transfer the amount b/w two accounts of same or different Bank.
Cheque is written by an individual and withdrawn from the account whereas

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Demand draft is issued by a bank where you have to pay before issuing.

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3.What are NBFCs and difference between NBFCs and Bank?
Non-bank financial companies (NBFCs) are financial institutions that provide
banking services, but do not hold a banking license. NBFCs do offer all sorts of
banking services, such as loans and credit facilities, retirement planning, money

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markets, underwriting, and merger activities. These institutions are not allowed to
take deposits from the public.
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4. What is Private Banking?
Banking services offered to high net-worth individuals. Private banking institution
assists the high net-worth individual in investing his/her money in exchange for
commissions and fees. The term "private" refers to the customer service being
rendered on a more personal basis.
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5. What is the Use of Computers in a Bank?

Computers are used for many purposes in banks like: Computer store details of
customers account information. Computers can solve billions of complex
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mathematical operations in fractions of a second. Computers can be used for user

authentication. Computers can be used on a network to instantly contact other
branches. When you use an ATM, you are using a networked computer terminal.
It's easier to access/update the information. An employee can also check a
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customer's account balance instantly. Computers help a bank save time and
money, and can be used as an aid to generate profits.
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6.What is recession? What is the cause for the present recession?

It can be defined as if country’s GDP growth is negative for two or more
consecutive years and the main cause for the present recession is Sub-Prime crisis
where it started in US.
 7 What is Sub-prime crisis?
The current Subprime crisis is due to sub-prime lending. These are the loans given

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to the people having low credit rating.

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8 What is a Repo Rate?
Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the
banks have any shortage of funds they can borrow it from RBI. A reduction in the
repo rate will help banks to get money at a cheaper rate. When the repo rate

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increases, borrowing from RBI becomes more expensive

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9. What is Reverse Repo Rate?
This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve
Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels
there is too much money floating in the banking system. Banks are always happy

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to lend money to RBI since their money is in safe hands with a good interest. An
increase in Reverse repo rate can cause the banks to transfer more funds to RBI
due to this attractive interest rates.
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10 What is CRR Rate?
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with
RBI. If RBI decides to increase the percent of this, the available amount with the
banks comes down. RBI is using this method (increase of CRR rate), to drain out
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the excessive money from the banks.

11 What is SLR Rate?

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to
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maintain in the form of cash, or gold or govt. approved securities (Bonds) before
providing credit to its customers. SLR rate is determined and maintained by the
RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR
is determined as the percentage of total demand and percentage of time liabilities.
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Time Liabilities are the liabilities a commercial bank liable to pay to the customers
on their anytime demand. SLR is used to control inflation and propel growth.
Through SLR rate tuning the money supply in the system can be controlled
efficiently.
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12. What is Bank Rate?

Bank rate, also referred to as the discount rate, is the rate of interest which a
central bank charges on the loans and advances that it extends to commercial
 banks and other financial intermediaries. Changes in the bank rate are often used
by central banks to control the money supply.

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13. What is Inflation?

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Inflation is as an increase in the price of bunch of Goods and services that projects
the Indian economy. An increase in inflation figures occurs when there is an
increase in the average level of prices in Goods and services. Inflation happens
when there are fewer Goods and more buyers; this will result in increase in the

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price of Goods, since there is more demand and less supply of the goods.

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14. What is Deflation?
Deflation is the continuous decrease in prices of goods and services. Deflation
occurs when the inflation rate becomes negative (below zero) and stays there for a
longer period.

15. What is PLR?

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The Prime Interest Rate is the interest rate charged by banks to their most
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creditworthy customers (usually the most prominent and stable business
customers). The rate is almost always the same amongst major banks. Adjustments
to the prime rate are made by banks at the same time; although, the prime rate
does not adjust on any regular basis. The Prime Rate is usually adjusted at the
same time and in correlation to the adjustments of the Fed Funds Rate. The rates
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reported below are based upon the prime rates on the first day of each respective
month. Some banks use the name "Reference Rate" or "Base Lending Rate" to
refer to their Prime Lending Rate.
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16. What is Deposit Rate?

Interest Rates paid by a depository institution on the cash on deposit.
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17. What is FII?

FII (Foreign Institutional Investor) used to denote an investor, mostly in the form
of an institution. An institution established outside India, which proposes to invest
in Indian market, in other words buying Indian stocks. FII's generally buy in large
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volumes which has an impact on the stock markets. Institutional Investors includes
pension funds, mutual funds, Insurance Companies, Banks, etc.
 18 . What is FDI?
FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets

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or a significant amount of ownership (stock) of a company in another country in
order to gain a measure of management control” (Or) A foreign company having a
stake in a Indian Company.

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19 What is IPO?
IPO is Initial Public Offering. This is the first offering of shares to the general

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public from a company wishes to list on the stock exchanges.

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20. What is Disinvestment?
The Selling of the government stake in public sector undertakings.

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21. What is Fiscal Deficit?
It is the difference between the government’s total receipts (excluding borrowings)
and total expenditure.
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22 What is Revenue deficit?
It defines that, where the net amount received (by taxes & other forms) fails to
meet the predicted net amount to be received by the government.
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23. What is GDP?

The Gross Domestic Product or GDP is a measure of all of the services and goods
produced in a country over a specific period; classically a year.
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24. What is GNP?

Gross National Product is measured as GDP plus income of residents from
investments made abroad minus income earned by foreigners in domestic market.
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25. What is National Income?

National Income is the money value of all goods and services produced in a
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country during the year.

 26 . What is Per Capita Income?
The national income of a country, or region, divided by its population. Per capita

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income is often used to measure a country's standard of living.

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27 . What is SEZ?
SEZ means Special Economic Zone is the one of the part of government’s policies
in India. A special Economic zone is a geographical region that economic laws
which are more liberal than the usual economic laws in the country. The basic

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motto behind this is to increase foreign investment, development of infrastructure,
job opportunities and increase the income level of the people.

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28 Functions of RBI?
The Reserve Bank of India is the central bank of India, was established on April 1,
1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

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The Reserve Bank of India was set up on the recommendations of the Hilton
Young Commission. The commission submitted its report in the year 1926, though
the bank was not set up for nine years.To regulate the issue of Bank Notes and
keeping of reserves with a view to securing monetary stability in India and
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generally to operate the currency and credit system of the country to its
advantage." Banker to the Government: performs merchant banking function for
the central and the state governments; also acts as their banker.Banker to banks:
maintains banking accounts of all scheduled banks. 29 What is monetary policy?
A Monetary policy is the process by which the government, central bank, of a
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country controls
(i) the supply of money,
(ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives
oriented towards the growth and stability of the economy.
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30. What is Fiscal Policy?

Fiscal policy is the use of government spending and revenue collection to
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influence the economy. These policies affect tax rates, interest rates and
government spending, in an effort to control the economy. Fiscal policy is an
additional method to determine public revenue and public expenditure.
31 What is bank and its features and types?
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A bank is a financial organization where people deposit their money to keep it

safe.Banks play an important role in the financial system and the economy. As a
key component of the financial system, banks allocate funds from savers to
borrowers in an efficient manner.
 32 What is Right to information Act?
The Right to Information act is a law enacted by the Parliament of India giving

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citizens of India access to records of the Central Government and State
overnments.The Act applies to all States and Union Territories of India, except the
State of Jammu and Kashmir - which is covered under a State-level law. This law

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was passed by Parliament on 15 June 2005 and came fully into force on 13
October 2005.

33 What is Cheque?

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Cheque is a negotiable instrument instructing a Bank to pay a specific amount
from a specified account held in the maker/depositor's name with that Bank.A bill
of exchange drawn on a specified banker and payable on demand.“Written order

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directing a bank to pay money”.

34 What is demand Draft?

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A demand draft is an instrument used for effecting transfer of money. It is a
Negotiable Instrument. Cheque and Demand-Draft both are used for Transfer of
money. You can 100% trust a DD. It is a banker's check. A check may be
dishonored for lack of funds a DD can not. Cheque is written by an individual and
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Demand draft is issued by a bank. People believe banks more than individuals.

35 What is a NBFC?
A non-banking financial company (NBFC) is a company registered under the
8A

Companies Act, 1956 and is engaged in the business of loans and advances,
acquisition of shares/stock/bonds/debentures/securities issued by government, but
does not include any institution whose principal business is that of agriculture
activity, industrial activity, sale/purchase/construction of immovable property.
NBFCs are doing functions akin to that of banks; however there are a few
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differences:
(i)A NBFC cannot accept demand deposits (demand deposits are funds deposited
at a depository institution that are payable on demand -- immediately or within a
very short period -- like your current or savings accounts.)
w.

(ii) it is not a part of the payment and settlement system and as such cannot issue
cheques to its customers; and
(iii) Deposit insurance facility of DICGC is not available for NBFC depositors
unlike in case of banks.
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36 What is NABARD?
NABARD was established by an act of Parliament on 12 July 1982 to implement
the National Bank for Agriculture and Rural Development Act 1981. It replaced
 the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell
(RPCC) of Reserve Bank of India, and Agricultural Refinance and Development

m
Corporation (ARDC). It is one of the premiere agency to provide credit in rural
areas. NABARD is set up as an apex Development Bank with a mandate for
facilitating credit flow for promotion and development of agriculture, small-scale

co
industries, cottage and village industries, handicrafts and other rural crafts.

37 What is SIDBI?

Z.
The Small Industries Development Bank of India is a state-run bank aimed to aid
the growth and development of micro, small and medium scale industries in India.
Set up in 1990 through an act of parliament, it was incorporated initially as a

on
wholly owned subsidiary of Industrial Development Bank of India.

38 What is SENSEX and NIFTY?

iti
SENSEX is the short term for the words "Sensitive Index" and is associated with
the Bombay (Mumbai) Stock Exchange (BSE). The SENSEX was first formed on
1-1-1986 and used the market capitalization of the 30 most traded stocks of BSE.
Where as NSE has 50 most traded stocks of NSE.SENSEX IS THE INDEX OF
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BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL SHOW DAILY
TRADING MARKS. Sensex and Nifty both are an "index”. An index is basically
an indicator it indicates whether most of the stocks have gone up or most of the
stocks have gone down.
8A

39 What is SEBI?
SEBI is the regulator for the Securities Market in India. Originally set up by the
Government of India in 1988, it acquired statutory form in 1992 with SEBI Act
1992 being passed by the Indian Parliament. Chaired by C B Bhave.
Gr

40 What are Mutual funds?

Mutual funds are investment companies that pool money from investors at large
w.

and offer to sell and buy back its shares on a continuous basis and use the capital
thus raised to invest in securities of different companies. The mutual fund will
have a fund manager that trades the pooled money on a regular basis. The net
proceeds or losses are then typically distributed to the investors annually. A
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company that invests its clients' pooled fund into securities that match its declared
financial objectives. Asset management companies provide investors with more
diversification and investing options than they would have by themselves. Mutual
funds, hedge funds and pension plans are all run by asset management companies.
These companies earn income by charging service fees to their clients.
 m
41 What are non-perfoming assets?
Non-performing assets, also called non-performing loans, are loans,made by a
bank or finance company, on which repayments or interest payments are not being

co
made on time. A debt obligation where the borrower has not paid any previously
agreed upon interest and principal repayments to the designated lender for an
extended period of time. The nonperforming asset is therefore not yielding any
income to the lender in the form of principal and interest payments.

Z.
42 What is Recession?

on
A true economic recession can only be confirmed if GDP (Gross Domestic
Product)growth is negative for a period of two or more consecutive quarters.

iti
43 What is foreign exchange reservers?
Foreign exchange reserves (also called Forex reserves) in a strict sense are only
the foreign currency deposits and bonds held by central banks and monetary
authorities.However, the term in popular usage commonly includes foreign
mb
exchange and gold,SDRs and IMF reserve positions.

44. What is the difference between Nationalized bank and Private Bank ?
A Nationalized bank is one that is owned by the government of the country. Since
8A

the people decide who the government is, they are also referred to as public sector
banks. The government is responsible for the money deposited into the accounts of
these banks. Where as a private sector bank is one that is owned by an independent
individual or a company that is controlled by a few individuals. In short, the bank
is owned by someone else and they run the bank. The person owning/running the
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bank is responsible for the money deposited into the accounts of these banks.

45. What is CRM?

Customer Relationship Management (CRM) refers to the ability to understand,
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anticipate and manage the needs of the customer, interaction and relationship
resulting in increased profitability through revenue and margin growth and
operational efficiencies.
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46. What is dematerialisation ?

Dematerialisation is a process by which the paper certificates of an investor are
taken back by the company/registrar and actually destroyed and an equivalent
number of securities are credited in electronic holdings of that investor.
 47. What is Defivative ?
A derivative is a financial contract that derives its value from another financial

m
product/commodity (say spot rate) called underlying (that may be a stock, stock
index, a foreign currency, a commodity). Forward contract in foreign exchange
transaction, is a simple form of a derivative.

co
48. What is Bancassurance ?
Bancassurance stands for distribution of financial products particularly the

Z.
insurance policies (both the life and non-life), also called referral business, by
banks as corporate agents, through their branches located in different parts of the
country.

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49. What is LAF ?
Liquidity Adjustment Facility (LAF) was introduced by RBI during June, 2000 in

iti
phases, to ensure smooth transition and keeping pace with technological
upgradation.
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50. What is Money Laundering ?
Money laundering means acquiring, owning, possessing or transferring any
proceeds (of money) of crime or knowingly entering into any transaction related to
proceeds of the crime either directly or indirectly or concealing or aiding in the
concealment of the proceeds or gains of crime, within or outside India. It is a
8A

process for conversion of money obtained illegally to appear to have originated

from legitimate sources.
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w.
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Ultimate SBI and IBPS PO
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Questions and Answers
pdf
NOVEMBER 30, 2014 BY DUSHYANT SHRIVASTAVA 85 COMMENTS

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Greetings from the Team Bankers Ambition! Discover and Leverage for the most
common IBPS and SBI PO Interview Questions and Answers provided in a PDF format
available for free download. The most easy way to enhance your interview skills for
IBPS and SBI Clerk and PO Exams is just about commence. We struggled to be
concise and exhaustive at the same time; and after vacillating for hours came with the
following result that we are going to present before you now!

you may want to visit top 5 common questions asked in interview about
yourself

00:00

For transcript for this audio , visit here
00:00

————————————————————————————————————————————

UPDATE:

Why did you choose so­and­so bank in your preference list?

While you may have your own reasons for choosing your preference list, visiting
this page may help you with your answer.

For common Interview Preparation Tips for SBI & IBPS, visit an in­depth
explanation on this page.

______________________________________________________________________________

SBI and IBPS PO & Clerk Interview Questions and Answers pdf

1. Why do you want to join banking sector?
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Ans. Banking is one of the fastest growing sectors in India providing a wide range of
career opportunities to graduates like me. Besides Banking requires maintaining
excellent rapport with the customers. Being a people’s person, I can very well relate to
this aspect of Banking. I am also well versed with computer knowledge that is now a
MUST in Banking like MS Excel, MS Word, etc.

PS: Don’t say stuff like “stable sector”, “high growth”, or “reputable job”. You
can get in trouble with cross questioning. Also, have some data ready as to why
Banking is the fastest growing sector. Only say stuff that you can back with data!

2.  What is a Bank?

Ans. A bank is a financial institution that accepts money from it’s customers for the
purpose of lending.

3. What is a Cheque?

Ans. A Cheque is a negotiable instrument instructing a bank to pay a specific amount
from a specific account.  In other words, A cheque is a bill of exchange drawn on a
specified banker and payable on demand. A cheque can be dishonored for variety of
reasons such as insufficient funds, signature mismatch, overwriting, cheque is 3
months+ old (stale), etc.

PS: Cross Questions: What’s a bearer cheque? What’s an Account Payee
Cheque?

4. What is a Demand Draft?

Ans. Demand Draft is a negotiable instrument that is used for effecting transfer of
money. Since it’s a banker’s check, it can’t be dishonored.

PS: Cross Question: What is the difference between Cheque and Demand Draft?

5. What is KYC?

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Ans. KYC stands for ‘Know Your Customer‘. As per KYC guidelines prescribed by RBI,
some personal information of the customer is required while opening an account (or
renewal of old accounts!). The objective is to enable positive identification of customers
by their respective Banks; and to prevent money laundering.

The documents as mandated under KYC guidelines are:

1.  Photograph
2.  Proof of identity. This includes Aadhar, Pan Card, Driving license, Govt ID, or any
other document acceptable to Branch Manager
3.  Proof of address. This includes Ration Card, Electricity Bill, or any other
document acceptable to Branch Manager

PS: Cross Questions can be asked about money laundering.

6. What is Money Laundering ?

Ans. Money laundering means presenting an illegally obtained money as legitimate
by creating a complex chain of sub processes. This convoluted chain makes it difficult
to trace the source of the illegitimate money.

 7. What do you know about RBI?

Ans. The Reserve Bank of India is the central bank of India. On the recommendation of
Young Hilton Committee, it was established on 1st April,1935 in accordance with
Reserve Bank of India Act, 1934.

PS: The Young Hilton Committee submitted it’s report in 1926, and it took nine
years to take an action on this report and establish RBI.

8. What are the functions of RBI?

1.  Regulate the issuance and circulation of Bank Notes
2.  Banker to the Government
3.  Banker to Banks
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4.  Custodian to Foreign Reserve of the country
5.  Lender of last resort
6.  Controller of Credit

PS: For an amazing Infographics on RBI, visit here

9. What is a Monetary policy?

Ans. Monetary policy is a type of macroeconomic policy by which central monetary
authority (RBI) controls the interest rates, thereby effecting control over supply of
money in the economy. The primary motive for this policy is to maintain price stability &
achieve high economic growth.

10. What is Fiscal Policy?

Ans. Fiscal policy is a type of macroeconomic policy by which our government makes
a strategic change to its spending and tax rates to influence a nation’s economy. Just
like Monetary Policy, Fiscal Policy is another tool by which country’s economic
conditions can be controlled.

11.  What is a Repo Rate?

Ans. Repo Rate is the rate at which RBI lends money to commercial banks. Whenever
any bank faces shortage of funds, it can borrow from RBI. Decreasing Repo Rate will
help banks avail more money at a cheaper rate. Vice versa, Increasing Repo rate will
make borrowing money from RBI more expensive.

PS: For more information on Repo Rate, visit here

12. What is Reverse Repo Rate?

Ans. Reverse Repo rate is the rate at which RBI borrows money from banks. RBI
uses this tool to drain excess money circulating in the banking system. Banks have
absolutely no qualms about lending money to RBI since their money is in safe hands;
not to mention a good interest, too.
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PS: For more information on Reverse Repo Rate, visit here

13. What is LAF ?

Ans. Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to
borrow money, and adjust their daily liquidity mismatches, through repurchase
agreements. LAF has two components: a) repo (repurchase agreement); and b)
reverse repo. When banks need liquidity to meet its daily requirement, they borrow from
RBI through repo. The rate at which they borrow fund from RBI is called the Repo rate.
When banks have excess liquidity, they park with RBI through the reverse repo. The
rate at which they lend fund to RBI is called the Reverse Repo rate.

14. What is CRR Rate?

Ans. Cash reserve Ratio (CRR) is the percentage of NDTL (Net Demand and Time
Liabilities) that banks have to keep with RBI as cash. If RBI decides to increase the
CRR percentage, the credit available to banks for lending comes down. Thus, RBI can
increase CRR rate to drain out the excess money from the banks.

PS: For more information on CRR, visit here

15. What is Bank Rate?

Ans. Bank rate a.k.a discount rate, is the interest rate at which the central bank (RBI)
charges loans and advances to commercial banks and other financial intermediaries.
Bank rate is yet another tool at the disposal of the central bank (RBI) to effectively
control the money supply.

16.  What is SLR Rate?

Ans. SLR (Statutory Liquidity Ratio) is the percentage of it’s NDTL (Net Demand and
Time Liabilities), a commercial bank has to maintain as liquid assets such as cash,
gold or govt. approved securities (a.ka. govt. Bonds) before lending to its customers.
SLR is a type of monetary Policy tool that RBI can use to effectively regulate the
expansion of credit by the banks.
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PS: For more information on SLR, visit here

17. What is PLR?

Ans. The Prime Interest Rate is the interest rate that a bank charges to it’s most
financially sound (or high credit worthy) customers. This rate remains basically the
same for most banks.

PS: From July 1, 2010, Base Rate has replaced the Benchmark Prime Lending
Rate. However, this applies to loans taken after July 1, 2010. All existing loans at
July 1, 2010 continues to be at BPLR. But if such old loans are renewed, they’ll
be linked to Base Rate. Cross Question: What’s the difference between PLR and
Base Rate?

18. What is Base Rate?

Ans. It is the minimum rate of interest that a bank is allowed to charge from its
customers. No bank can offer loans at a rate lower than Base rate to any of its
customers unless mandated by the govt.

19. What is Deposit Rate?

Ans. Interest Rates paid by banks or other financial institutions on the cash deposited
with them by the customer.

PS: To know more on deposits, visit here.

20. What are Basis Points?

Ans. BPS is an acronym for basic points and  is used to indicate changes in rate of
interest and other financial instruments.

PS: 1 basis point change corresponds to 0.01% change. So when we say that
repo rate has been increased by 25 bps, it means that the rate has been
increased by 0.25%
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21. What are Treasury Bills?

Ans. Treasury bills ( a.k.a T­Bills) are the short term money market instrument (bonds)
issued by central government through auctions. These T­Bills can be issued for 91
days, 182days, or 364 days.

PS: There are no T­bills issued by state government. From 1st April, 1997 T­bills
have been replaced with Ways & Means Advances

22. What are Commercial Papers?

Ans. Commercial papers are short term money market instrument (debts issued in the
form of promissory note) by corporate, primary dealers, or financial institutions. The
maturity period of commercial papers can range from 7 days to 1 year from the date of
issuance.

23. What is the Banking Ombudsman Scheme?

Ans. The Banking Ombudsman Scheme offers an easy and inexpensive platform to
bank customers for lodging their complaints against certain services offered by the
Banks. The Ombudsman sees to it at the complaints of the customers are resolved in a
timely manner. The Banking Ombudsman Scheme is introduced under Section 35 A of
the Banking Regulation Act, 1949 by RBI with effect from 1995.

PS: All Scheduled Commercial Banks, Regional Rural Banks & Scheduled
Primary Co­operative Banks comes under this Scheme.

PS: For more information on Banking Ombudsman, visit here

24. What is a Derivative ?

Ans. A derivative is a financial contract that derives its value from another financial
product. This underlying product may be a stock, foreign currency, a commodity, etc.
Forwards Market is a nice example of derivative trade.

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25.  What is Inflation?

Ans. Inflation is as an increase in the price of goods & services that projects the
Indian economy. This rise in prices means the demand for these goods and services
exceeds their supply.

PS: Cross Question: What’s the current index for measurement of Inflation?
How’s WPI different from CPI?

PS: For more information on Inflation, visit here

26. What is Deflation?

Ans. Deflation is the decrease in prices of goods and services. During Deflation, 
Inflation rate becomes negative .

PS: Cross Question: Why is deflation bad when there is a decrease in prices?

PS: For more information on Deflation, visit here

27. What is FII?

Ans. FII (Foreign Institutional Investor) used to denote an investor that proposes to
make an investment in Indian securities. Institutional Investors includes pension funds,
mutual funds, Insurance Companies, Banks, etc.

PS: FII  doesn’t exist now. A new investor category Foreign Portfolio
Investor(FPI) has been formed by merging FIIs, Sub Accounts and Qualified
Foreign Investors(QFI).

28. What is FDI?

Ans. FDI (Foreign Direct Investment) means injection of foreign funds in Indian
Markets.

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PS: Foreign investment of 10 per cent
or more in a listed company will now
be treated as FDI. Whereas lesser
investment will be treated as FPI.

29.  What is IPO?

Ans. IPO stands for Initial Public Offering.
This is the first offering of shares to the
general public by a company who wishes
to enlist itself on the stock exchange.

30. What is GDP?

Ans. The Gross Domestic Product or
GDP is a measure of all of the services
and goods produced in a country over a
specific period (usually one year).

31. What is GNP?

Ans. Gross National Product is measured
as GDP plus income of residents from
investments made abroad minus income
earned by foreigners in domestic market.

32. What is Revenue deficit?

Ans. Where the net amount received by the govt. (from taxes & other forms) is lesser
than the predicted amount, the shortfall amount is called Revenue Deficit.

33. What is Fiscal Deficit?

Ans. It is the difference between the government’s total receipts (excluding
borrowings) and total expenditure.
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34. What is Disinvestment?

Ans. When a government decides to dilute it’s stake in public sector undertakings,
it’s called disinvestment.

35. What is National Income?

Ans. National Income is the money value of all goods and services produced in a
country during the year.

36.  What is Recession?

Ans. When GDP (Gross Domestic Product) growth is negative for a period of two or
more consecutive quarters.

37. What causes Sub­prime crisis?

Ans. The Sub­prime crisis occurs when the too many loans are given to customers with
low credit rating.

38. What is Dematerialization ?

Ans. Dematerialisation is a process by which the paper certificates of an investor are
taken back by the company/registrar and an equivalent security is credited in the
electronic holdings of that investor.

39. What is a DeMat Account?

Ans. DeMat is just a dematerialized account. One can open a DeMat account if one
wants to buy or sell stocks. In order to open a DeMat account, one needs to approach
the Depository Participants. The advantage of DeMat account is that one doesn’t need
any physical evidence for possessing the shares. All such things are taken care of by
the DPs.

PS: Physically only 500 shares can be traded as per SEBI guidelines. From April
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2006, it’s essential to have PAN for any person opening a DeMat account.

40. What is RuPay Card?

Ans. RuPay is a domestic card payment network set up by National Payments
Corporation of India (NPCI). The initial focus of NPCI is to approach banks that do not
issue cards. Example Regional Rural Banks  and urban co­operative banks.

41. What is Private Banking?

Ans. Banking services offered to high net­worth individuals is called Private Banking.
Financial Institutions offering Private Banking earns commission by providing quality
assistance to their high net­worth customers in investing their money. By Private, we
mean that the services are provided and tailored on a more personal basis.

42. What is BSBDA?

Ans. On August 10, 2012, RBI mandated that any individual, including poor or those
from weaker section of the society, can open zero balance account in any bank. These
account are called Basic Savings Bank Deposit Accounts.

PS: These guidelines are applicable to all scheduled commercial banks,
including foreign banks having branches in India. No frills accounts, in use
earlier, are now renamed as BSBDA.

43. What is NABARD?

Ans. NABARD (National Bank for Agriculture and Rural Development) is an apex
development bank in India having headquarters in Mumbai. It was established on 12
July 1982 as per National Bank for Agriculture and Rural Development Act 1981. It
replaced the Agricultural Credit Department (ACD), Rural Planning and Credit Cell
(RPCC) of RBI, and Agricultural Refinance and Development Corporation (ARDC). The
primary objective of NABARD is to provide rural credit. NABARD was established on
the recommendations of Shivaraman Committee.

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44. What is SEBI?

Ans. SEBI (Securities and Exchange Board of India) is the regulator for the Securities
Market in India. Originally set up by the Government of India in 1988, it acquired
statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament
chaired by C B Bhave. SEBI has its Headquarters in Mumbai. Controller of Capital
Issues was the regulatory authority before SEBI came into existence.

45. What is SIDBI?

Ans. SIDBI (Small Industries Development Bank of India) is a state­run bank aimed to
aid the growth and development of micro, small and medium scale industries in India.
Set up in 1990 through an act of parliament, it was incorporated initially as a wholly
owned subsidiary of Industrial Development Bank of India.

46. What is SWIFT?

Ans. SWIFT stands for Society for worldwide Interbank financial telecommunication.
Almost all FOREX related messages are sent through SWIFT. SWIFT Code is a
standard format of bank Identifier code. This code is used particularly in International
transfer of money between banks. SWIFT Code consists of 8 or 11 character. In SWIFT
code, first 4 characters are bank code, next 2 characters are country code, next two
characters are location code. The next 3 digits are optional and indicate the branch
code.

PS: For more information on Codes used in Banking Industry, visit here

47. What is the difference between Nationalized bank and Private Bank ?

Ans. A Nationalized bank is one that was once owned privately, but were later brought
under government’s control. This was carried out in two phases. One in 1969 when 14
banks were nationalized. And the other in 1980 when 6 more banks were brought under
govt’s control. A private bank is a bank that is still privately owned.

PS: There’s a difference between Nationalized Banks and Public Sector Banks. Cross
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 03/12/2015 IBPS PO Interview Questions and Answers pdf

Question on how many nationalized banks are there?

48. What are Non­Perfoming assets?

Ans. Non performing Assets aka NPA refers to bad loans. If the borrower defaults on a
payment (whether principal or interest) for 90 days, the loan is classified as NPA.

49. What is SEZ?

Ans. SEZ means Special Economic Zone is the one of the part of government’s policies
in India. A special Economic zone is a geographical region that has more liberal
economic laws as compared to the rest of the country. This is to increase foreign
investment, development of infrastructure, job opportunities and increase the income
level of the people.

50. What are Mutual funds?

Ans. Mutual funds are investment companies that pool money from investors and
use this capital to invest in securities of different companies. For this, they charge some
commission or fees from their clients.

PS: Mutual funds, hedge funds and pension plans are all run by asset
management companies.


Show ur Love!
51.  What is SENSEX and NIFTY?

Share this post with your friends!

SENSEX  stands for Sensitive Index and is associated with the Bombay Stock
Exchange. Established in 1986, this index shows the 30 most traded stocks of BSE.
Facebook  Twitter  Google+
NIFTY, on the other hand, is the index of National Stock Exchange. NIFTY shows the
143 16 49
50 most traded stocks of NSE

PS: Cross Question: What do you mean by Index?

52. What is NOSTRO and VOSTRO account?

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03/12/2015 IBPS PO Interview Questions and Answers pdf

Ans. A NOSTRO account is maintained by an Indian bank in foreign countries. A
VOSTRO account is maintained by a foreign bank in India.

53. What is foreign exchange reserve?

Ans. Foreign exchange reserve (aka Forex reserves) is the foreign currency deposits
and bonds (only), that a country’s central bank or monetary authorities hold.
Sometimes in broader aspect, Forex reserve is also used to indicate foreign exchange,
gold, SDRs and IMF reserve positions.

54. What is Bancassurance ?

Easy to Learn CRR, SLR, Repo &

Ans. Bancassurance is selling of financial products especially the insurance policies by
Reverse Repo Explanation
banks. Click Here!

55. what is Bitcoin?

Ans. Bitcoin is a type of digital money. It’s decentralized peer­to­peer payment
network. In other words, it is powered by its users with no central authority.

56. What is a Non­Banking Financial Company (NBFC)?

Ans. Non­banking financial companies aka NBFCs are financial institutions that provide
banking services, but do not hold a banking license. These institutions can’t take
deposits from the public. They also can’t issue cheques drawn on themselves; as
they do not come under Payment and Settlement System. However, these institutions
performs all operations under the ambit of banking regulations.

PS: NBFCs are not insured by DICGC (Deposit Insurance and Credit Guarantee
Corporation)

57. What is PM Jan Dhan Yojna?

Ans. PMJDY is a scheme for financial inclusion launched by the PM Narendra Modi on
28 August 2014. The scheme was first announced on his first Independence Day
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03/12/2015 IBPS PO Interview Questions and Answers pdf

speech on 15 August 2014.

Highlights of the scheme:

1. Accounts will be zero­balance bank accounts with issuance of RuPay debit card. In
addition, an accidental insurance cover of Rs 1 lakh will be provided by HDFC Egro.

2. Those opening accounts by January 26, 2015 will be given additional life insurance
cover of Rs 30,000 by LIC.

3. After Six months of satisfactory operation of the account, holders can avail 5,000 
overdraft from the bank.

4. Mobile banking for the poor would be available through National Unified USSD
Platform (NUUP)

PS: Cross question on the current status of the Jan Dhan Yojna can be asked

If you want to download the ibps po interview questions and answers pdf, you may do
so by clicking here. (link active now!)

Other good reads on the topic:

1.  Mrunal’s Blog On Ibps Interview 
2.  Common Tips on Interview by JagranJosh

Some sources that we extensively referred:

1.  Investopedia
2.  Wikipedia
3.  Arthapedia
4.  Economictimes

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03/12/2015 IBPS PO Interview Questions and Answers pdf

That’s all for the ibps po interview questions and answers pdf.

If you want any other questions to be in the list that you strongly feel are important, do
tell in the comments. If you see any errors that might have inadvertently crept in… Well!
Do report that too in the comments 

Wishing you all success in your endeavors ! All the best, Guys!

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About Latest Posts

Dushyant Shrivastava
Hi there, 
I'm Dushyant Shrivastava, A Professional blogger from Hyderabad, currently in
Bangalore.

My niche is teaching stuff about IBPS and SBI competitive exams. I mostly talk
about preparation tutorials, and occasionally about some recent exam
notifications. You may visit my site at BankersAmbition.com to get a glimpse of
my writings.

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RITESH MEHRA
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1. Tell me something about yourself?
Generally this is the first question which is put up in front of the candidate appearing
in the interview. To answer this, the candidate must tell his name, place of residence and his
current work or educational degree along with a very brief note on his family-father, mother
and siblings. He/she can also tell about his father or mother’s occupation. Some key points to
note here are :-
 He must know the meaning of his name and specific reference with his name if any. For
ex. A boy names ―Prashand‖ was asked about the geographical connection of his name i.e.
 PrashantMahasagar or Pacific Ocean. 
 The answer should be precise and question like – if your father is a teacher then why do
you want to become a banker? Can come up from your answer to the first question. Be
 prepared with the answers to these expected questions. 
 Because this is the first question so the candidate must give a short and effective answer.
 You might be nervous at the beginning but remember to keep a smile on your face. 
2. Where have you come from and what is famous in your city?
The candidate must tell about his place of living – city and state. If the board further
asks about any specifications, then name of the district etc. should be told. He/she must tell
about the famous things of his place. For ex- a candidate from Lucknow may tell about
 Imambara, chicken clothes, ―tehzeeb‖ of Lucknow etc. The key things to deal this question
effectively are :-
 The candidate must know about the local MLA and MP from his area. If any renowned
 personality belongs to that are, you should be aware of the details. 
 He must have full knowledge about the place, its history, famous monuments, personalities,
rivers, at times even number of 
railway stations in the city etc, also about the politics of that state – CM and ruling party
and all other nittygritties of his place.
 For ex- A candidate from Ghazipur, U.P. was asked about cultivation of ―Poppy seeds‖ as
 Ghazipur is famous for cultivation of Poppy seeds. 
 At times, questions about local politics are also put forward like a candidate, from Amethi
was asked about the electoral battle between Rahul Gandhi and Kumar Vishwas from
 Amethi. 
 A good answer to such questions leaves a very positive impact on the board as it
demonstrates your awareness about the surroundings and the fact that you are well
 prepared puts you ahead of others. 
3. Why do you want to join the banking industry?
To answer this question, you can say something like – ―I want to join this industry
because it can provide me a stable careen with good growth prospects. IT is one of the fastest
growing sectors of the nation and provides great career opportunities.‖
There could be many other reasons for you wanting to join the bank industry for e.g.
it is an honest organization, good working conditions, chances to directly interact with public
etc. The choice of reason could be anything that suits you as a person.
This is a very commonly asked question and you must be prepared to answer it.
4. 9211825282
Please tell us about your strength and weaknesses?
Here, the answers vary from candidate to candidate. But the strength and weakness
should be such that they match up to or are in synchronization with the personality of the
candidate. For ex- If a candidate says that his strength is general awareness while in reality he
possesses least knowledge of current affairs – cross questioning can easily unveil him and
could actually land him in trouble. Some key things to answer this question effectively are :-
 Try to put forward a strength which is useful in the banking sector. For ex- good
communication skills, adjustable etc. The strength should bring about a positive aspect of
your personality in front of the board. 

 This is a question from which you can actually turn the interview in your favour. For ex- If
you say something like ―I have won many awards in debate competitions so I would think
 that good oratory skills are my strength.‖ 
This way I can inform the board about my previous achievements also and can get an
 advantage over others. 
 They may ask how your quality/strength will be helpful to bank. Be prepared with an
 answer. 
 Weakness should not be very negative like short temper, irregular etc.as they leave a bad
 impression. 
 Remember, this question is the golden chance for you to turn the ball in your court. In the
answer you must introduce all your unique talent in front of the board. So that the
 interview enters in your own comfort zone. 
5. After doing B.Sc/B,tech/MBA/MA why do you want to choose banking? Why not
something related with your field of education?
 You must give honest and sensible answers to such question. For ex- A MBA
candidate may say that there are hardly good jobs in MBA as now. Banking is a safe sector
providing great employment opportunities. In the answer, you must show your keen interest in
joining banking sector and it should not
look like you don’t have an option so you are choosing it.
You can also expect some questions from academics. A science stream student may be asked
about Newton’s Law etc. So, you must also prepare the subjects studied by you in the degree.
6. What are the basic documents a person requires to open an account?

The RBI has advised banks to follow the Know Your Customer (KYC) guidelines where some
personal information of the account holder is obtained by the bank. This information includes :
- photograph, proof of identity and proof of address. In 2013, AADHAR cards and MNREGA
cards are included in KYC papers. Without these documents a person can’t open his account.
Key points :-
  The interviewer might ask whether you have a bank account or not. 
 It is preferable to have an account and to know about the process because it will only help
 you if such questions come up. 
7. Who is the governor of RBI?
As of today (March`14), you can answer this as, Mr. RaghuramGovindRajan is the
rd
23 governor of RBI. Before taking reins as RBI governor he was an officer on special duty in
RBI. He has also served as economic advisor in PMEAC. His tenure is of 3 years ending in
September 2016.
 In IBPS interviews, you must have a quick read about the prominent personalities of
 banking industry, especially governor and deputy governors of RBI. 
9211825282
 You must address the name of personalities by using Mr. or Madame in case of male and
 female respectively. 
 Try to keep yourself updated about the recent happenings of at least the month prior to
interview. 
th
7 Tell us something about the 27 or latest public sector bank in India.
th
 Sir, the 27 public sector bank in India is BhartiyaMahilaBank.It was created by Finance
th th
Bill 2012. The first BMB was opened in Mumbai on 19 November 2013 on the 94
birth anniversary of Indira Gandhi. Ikdia is the third country in the world to have a bank
especially for women after Pakistan and Tanzania.
  Tagline- "women empowerment economically". 
  Head- UshaAnanthaSubramanayam
  The bank allows deposit from everyone, but lending will be focused for women. 
 This bank is very important because it is the latest and 27th PSB of India. So, try to know
 every basic point about BMB. 
 Initial capital of Rs. 1000 crore. 
Similarly, if there has been some other initiative in that year, you should be well aware of it.

9. What do you understand by the GDP of the country?

The final value of all the goods and services produced under the geographical area of a
country is
the Gross Domestic Product of that country. GDP is
calculated at consumption, investment and exports
and Prports are subtracted from the sum of these
three.

10. Who are the Bharat Ratna awardees, 2014?

Sr. Mr. Sachin Tendulkar and Mr.C.N.Rrao are
the two recent awardees of Bharat Ratna award. Both of them are the 42nd and 43rd recipients of the
award. CNR Rao received the award for his contribution in the field of chemistry whereas Mr.
Tendulkar received the award for his contribution in the game of cricket. Viso, he is the first
sportsperson to have recived the highest honor of India.

11. What is a Non -banking Financial Company (NBFC)? Difference between NBFC and
banks?
NBFC is a company registered under the companies act, 1956 which is involved in the business
of tans, shares/stocks, etc. Non-banking financial companies are financial institutions that provide
banking services, but do not hold a banking license. These institutions are not allowed to take
deposits from the public. NBFCs do offer all sorts of banking services, such as loans and credit
facilities, retirement Manning, money markets, underwriting, and merger activities. The basic
difference between bank and NBFC is:-
  They can't accept demand deposits. 
 They are not a part of the payment and settlement system and can't issue cheques drawn
 on themselves 
  They are not registered in the banking act and don't have a banking license. 
 They don't have to maintain CRR, SLR or CASA like banks. 

12. 9211825282
What is the difference between nationalized banks and private banks?
A nationalized bank is owned by the govt of that country and is also known as public sector
bank
whereas a private sector bank is owned by an independent individual or company.

13. What are the Non Performing assets of a company?

A NPA is an obligation payable to the bank which has not been made or the interest and
principal amount has not been paid on the due time. NPA is the loan or credit provided by the bank
to its customers which could not be recovered in due time. Thus NPA is somehow not yielding any
income to the lender either in
the form of principal or interest payments. NPA is also known as "bad debts".
 NPA is shown at the assets side of the balance sheet whereas deposits are shown at
 the liability side 
 If there is any recent story or news regarding NPA, then revise it thoroughly. For ex:-
Recently, United bank of India was marred in loss due to its rising NPA. So was the
 case with Kotak Mahindra Bank. 
14. What are the various risks that banks face?
Sir :-sere are mainly three types of risks faced
by banks:-
 Credit Risk: - loan or NPA.
 Market Risk: - Money invested in the market.
 Operational risk: - Day-to-Day working risks.

15. What do you mean by term "CASA" related to bank?

 CASA stands for Current Account Savings Account. The CASA ratio shows how much
deposit a bank has in the form of current and saving account deposits in the total deposit. A higher
CASA ratio means better operating efficiency of the bank because on current account there is no
interest payable whereas on savings account a tiny 3.5% interest is payable by the bank. CASA ratio
shows how much of the deposit of the bank comes from the current and savings deposit.

16. What is the difference between cheque and demand draft?

Cheque is a negotiable instrument which is paid to the bearer but a demand draft is a
negotiable
instrument always payable on order.

17. What are the parts of bank’s capital?

Bank has following parts of capital:-
  Tier 1 capital : - Paid up capital (core capital) + Reserves (owners or promoters` fund) 
 Tier 2 capital : - Secondary Capital (borrowed funds) + general loss reserves +
 subordinated term debts + undisclosed reserves (can’t be maintained in India) 
 Tier 3 capital : - same as tier 2 capital but with a higher amount in order to face the
 market risks of the bank. 
18. Tell us something about BSBDA.
BSBDA stands for Basic Savings Bank Deposit
Account. BSBDA is the new name for ―no-frill accounts‖ under which anyone an open a bank
account with even zero balance in it or ―zero balance account‖. This BSBDA is aimed at providing
banking facilities to weaker section of the society and improve financial inclusion. All scheduled
commercial banks in India including foreign banks
9211825282
with branches in India have to avail BSBDA.
Important :-
  Such accounts are opened with ―relaxed KYC norms‖. 
 Relaxed KYC norms include an affidavit by the Pradhaan or councilor of a village 
or area confirming about the person concerned.
 In such accounts there are certain restrictions – in a month, 4 withdrawls can be done at a
maximum. This includes ATM withdrawls. The amount withdrawn in a month
shouldn’t exceed Rs. 10,000 and the balance in the account at anytime shouldn’t exceed
Rs. 50,000 

19. What is the meaning of “base rate”?
Base rate is the minimum rate of interest which
a bank has to charge from its customers and a bank can’t sanction loan on a rate below the base rate.
This rate came into effect from July 1 2010. Before Base
rate there was Basic Prime Lending Rate or BPLR introduced in 2003. It was replaced with
Base Rate because in BPLR banks had an option to loan their special customers below BPLR.
Banks may choose any benchmark to decide on the base rate. The exceptions of base rate are:-
 Agriculture loans
 Govt. sponsored schemes
 Staff loans

Only under the above cases, bank can lend below base rate.

20. We hear regularly that all bank branches are turning CBS. What is CBS?
 Sir, CBS stands for CORE banking solutions under which the branches of the banks are
interconnected with each other through intra net with a central database server. Now, with this
facility, a person having an account in a certain branch of the bank can operate from any other
branch of the same bank. He need not visit the same branch to operate his account. The CORE word
in CBS stands for Centralized Online Real time Exchange.

21. What is Para Banking?

Para Banking includes all the services provided
by banks apart from day to day banking. For example:
- Debit cards, Credit cards, Life Insurance products, Cash Management services etc.

22. What are the components of the monetary policy of RBI?

The components of monetary policy include CRR, Repo rate, reverse repo rate, SLR, MSF
and Bank Rate.

23. What is priority sector credit?

All Indian banks and foreign banks (which have
more than 20 branches in India) are required give
40% of their credit to priority sector out of
which 18% is for agriculture. In case of Regional
Rural Banks, 60% credit is to be given to priority
s tor. Priority sector includes- Agriculture, Micro and
small enterprise, Education loan (upto 10 lakh
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for study in India and upto 20 lakhs for study in
foreign nations) and housing loan. Priority sector
lending is one of the most important part of a bank's lending and it is devoted towards those sector
which are important for public welfare.

24. What is the difference between Micro finance and micro credit?
Micro credit is giving a small amount of loan to the customers whereas Micro Finance is a
wide term. It includes small loan + training on financial matters. In other words, Micro finance=
Microcredit
 Financial Literacy.

25. What is financial inclusion? (One of the most important questions).

Financial inclusion is the availability of banking services at a affordable cost in order to include
the
weaker section of the society in the banking system. In 2004, Kofi Annan (UNO Head) was
addressing UNESCO conference and the word "Financial Inclusion" was for the first time used by
him at that time. In 2006, a committee was made under the chairmanship of Mr. HR Khan for
financial inclusion and the report said that 57% of Indian population was deprived of banking
facilities.
26. What are the steps taken by banks to promote financial inclusion?
1. Publicity of banks so that more and more people open the accounts.
2. BSBDA so that poor people can also open their account.
3. People with agriculture land are being provided with Kisan Credit Card.
4. General Purpose Credit card provided to people with no agricultural land where
maximum limit of
withdrawal is Rs.15,000 and rate of interest is
4%.
5. Ultra small banking and banking correspondents.

• CRISIL has made an index to calculate financial inclusion named as "CRIS1L I NCLUSIX"
and in June 2013, there was 40% financial inclusion as per the index.

27. What is REPO rate and reverse REPO rate?

Repo rate is the rate at which banks borrow
from RBI during shortage of funds. This is a short term loan provided for upto 90 days by selling
securities to RBI and receiving money in lieu of it. Reverse repo rate is the rate at which banks
deposit their excess liquidity with the RBI. In other words, the rate at which RBI borrows from
banks by selling securities in order to control excess liquidity in the market is reverse repo rate
Liquidity Adjustment Facility (LAF) introduced in 2000 has a provision that reverse repo rate will
be 1% less than the Repo rate.

28. What is Bank rate?

It is same as repo rate but here the time period is
for more than 90 days.

29. What is Cash Reserve Ratio (CRR)?

CRR is the part of Net Demand and Time
Liabilities (NDTL) or cash of the bank deposited with
the RBI. 9211825282
A higher CRR makes loans expensive
as liquidity is controlled by RBI. NDTL is the
deposits of the customers with the bank. Net
demand liabilities are deposits payable on the demand on customer, or when the customer wants. Ex
-current account, savings account. Time liabilities are the deposits which are payable only on a
specific time or after a period of maturity. For ex:- Fixed deposits, Recurring Deposits.

30. What is Statutory Liquidity Ratio (SLR)?

SLR is the amount of NDTL which a bank
needs to maintain in the form of cash, gold or govt. securities before providing credit to its
customers. Through SLR, RBI makes sure that bank always have a reserve amount out of their
deposits to meet any future contingencies.

31. What is Marginal Standing facility (MSF)?

In MSF, banks borrow money from RBI for
upto 24 hours. MSF is always 1% above the repo rate and banks can draw only upto 25 of their
NDTL from RBI.

32. What is Term Repo?

Under term repo, RBI lends to banks through
auction of funds. The minimum interest charged has to be above the repo rate and there is no limit
for maximum interest rate because auction is made on the rate of interest.

33. What is white label ATM?

 It refers to ATMs owned by corporate or private
operators seeking to earn a commission by banks for transactions performed by their customers. For
ex:- i NDICASH by TATA group.

34. What is brown label ATM?

It refers to the ATMs where investment,
installation and maintenance is by a private operator but the license and branding is by a commercial
bank.

35. Tell us something about NABARD and its functions.

NABARD was established by an act of Parliament on 12 July 1976 as National Bank for
Agricultural and Rural Development. It is the
apex bank to provide rural credit and monitor the RRBs. The main functions of NABARD are:-
 Provide refinance to RRBs and other banks in rural areas for lending.
 Acts as a subsidiary for RRBs and co-operative banks.
 It has two subsidiaries:-
 NABFINS:- NABARD financial
 NABCON: - NABARD consultancy.

36. What is banking ombudsman scheme?

The banking ombudsman scheme is a scheme to
listen to customer's grievances and complaints regarding certain services provided by the bank. It
was introduced under the Section 35 A of banking regulation act, 1949 by RBI with effect from
1995 which was later amended and became the banking ombudsman scheme, 2006. Customer can
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appeal against the decision of ombudsman to deputy governor of RBI. He is the highest authority of
appeal. All banks in India are covered under the scheme.

37. What is the difference between Fll and FDI?

FDI or foreign direct investment is an
investment that a parent company makes in a foreign country. Fl I or Foreign Institutional Investor
is an investment made by an investor in the markets of a
foreign nation. Fl I can enter the stock market
easily and also withdraw from it easily. But FDI
cannot enter and exit that easily as FDI only
targets a specific sector.

38. What is the CAD? What is Fiscal deficit?

CAD or current account deficit is the difference
between the imports and exports of a nation in one financial year whereas fiscal deficit is the
difference between total revenue and expenditure of a nation.

39. What is inflation and deflation?

Inflation is the increase in the price of goods
and services due to more demand and less supply. In inflation, there is more liquidity in market
which
has to be controlled to reduce the purchasing power of
customers. Deflation is the decrease in prices of goods and services due to more supply and
very less
 demand. In deflation, there is lack of liquidity in market which results in very weak purchasing
power of
people.

40. What is Capital Adequacy Ratio? What is DEMAT account?

CAR is the proportion of capital to the banks' risk. DEMAT accounts are those in which
shares, securities and insurance policies are kept in electronic form.

41. Name a few poverty eradication schemes of

govt. of India.
Food Security bill, MNREGA, SarvaShiksha
Abhiyaan, AntodayYojana, JNURRM, Swalamban
Yojana, Nirmal Gram Yojana, Rajiv Awas
Yojana, Indira Gandhi Pension plan etc. (Also read in
detail about these schemes.)
Apart from the questions listed above, the
candidate needs to thoroughly read about the latest happenings at the time of his interview. He
must read the newspaper of the very day of his interview
because there have been many instances where the
board asks the news of that day.
He needs to prepare a full note about RBI, and
types of banks, functions of RBI, and the latest
monetary policy given by RBI etc. and many
other banking terms and facts, insurance facilities provided by banks, important bills like food
security bill, RTI etc. 9211825282
Candidate must remember that personal questions are the most important part of the interview
as they give you the scope to stand different from others. The key points following the answers are
very important. So, bear them in mind and prepare accordingly.

Banking structure questions and answers for bank recruitment

Q. 1. What is a bank?
Ans. Bank is a financial institute where we deposit the money. The bank accepts this money for
the purpose of lending and repays it on demand.

Q. 2. What is the major functions of any bank?

Ans. Major Functions of bank are:-
 Accepting deposits from public or firm.
 Lending money to public.
 Transferring money from one place to another
Credit creation.
 Act as trustee.
 Keep valuables in safe custody.

Q. 3. In how many types you may categorize the bank in India?

Ans. We can categorize the banks into five categories
 Central bank (RBI)
 Public sector banks
  Private sector banks
 Co-operative sector banks
 Development bank or financial institution

Q. 4. What are scheduled commercial banks?

Ans. Scheduled commercial banks are those banks in India which were included in the second
schedule of
Reserve Bank of India (RBI) Act, 1934.

Q. 5. In which year national housing bank (NHB) started its operation?

Ans. NATIONAL HOUSING BANK (NHB) started its operations in 1988.

Q. 6. Under which act were the. State Bank of India and its subsidiaries nationalized?
Ans. The State Bank of India and its subsidiaries where nationalized under SBI Act, 1955.

Q.7. What is non- scheduled bank?

Ans. Non —scheduled bank in India means a banking company as defined in clause (C) of section
5 of the BANKING REGULATION Act, 1949.

Q. 8. What are Co-operative banks?

Ans. Co-operative banks are organized under the provision of co-operative credit society's law of
state.
The major beneficiary of this bank is agricultural sector.

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Q. 9. Which is the first bank that was incorporated at the initiative of World Bank and in
which year?
Ans. The Industrial Credit and Investment Corporation of India Limited °GIGO in the year
1955.

Q.10. How may development banks are there in India and name them?
Ans. There are six development banks are there in India. They are: - ICICI IDBI SIDBI - EXIM
BANK - NHB - NABARD

Q.11. In which year Indian Banks Association (IBA) was formed and initially with how
many members?
Ans. IBA was formed in 26 September, 1946 with 22 members.

Q.12. What is KYC?

Ans. KYC is the acronym for "know your customer", which is termed for the process of proper
identification of account holder.

Q.13. What is CRAR?

Ans. The Reserve Bank of India had made a norm that every bank has to maintain an adequate
amount of capital on continuous basis and this adequacy of capital is measured in terms of
CAPITAL TO RISK-
WEIGHTED ASSEST RATIO which is also known as CRAR.

Q.14. What is the minimum amount of money that should be remitted through RTGS?
Ans. We can remit Rs 2,00,000/- minimum through RTGS.

Q.15. How many centres of EFT are present in India?

Ans. There are 15 centres available for EFT in India at the moment.
Q.16. Which technology is used by the banks for settlement of cheque?
Ans. For the settlement of cheque magnetic ink character recognition (MICR) technology is used by
the banks.

Q.17. How many types of electronic clearing service (ECS) are there?
Ans. There are two types of ECS used in banks. They are:-- ECS-credit - ECS-debit

Q18. Who insures the banks in India?

Ans. Deposit Insurance and Credit Guarantee Corporation (DICGC) insure the banks in India.

Q.19. What is KCC and in which year was it introduced?

Ans. Acronym of KCC is Kisan Credit Card and it was introduced in 1998-99 which helps farmers
to draw the cash for production need.

Q.20. Which was the first Indian bank to get an ISO certification?
Ans. CANARA bank was first Indian bank that got an ISO certification.

Q.21. What do you mean by IMPS?

Ans. IMPS stands for Immediate Payment Service. It is a mobile remittance service that allows a
real-time fund transfer from one account to another through cell phone.
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Q.22. Which was the first Indian bank to set up Internet kiosk?
Ans. ICICI was the first bank who had set up the Internet kiosk in partnership with n-
LOGUE
communications.
Q.23. Name the financial institution built by Industrial Development Bank of India (IDBI)?
Ans. The financial institutions built by IDBI are:-
 NATIONAL STOCK EXCHANGE OF INDIA (NSE)
 THE NATIONAL SECURITIES DEPOSITORY SERVICE LIMITED (NSDL)
 STOCK HOLDING CORPORATION OF INDIA (SHCIL)

Q. 24. According to Narasimham committee what is the minimum amount of money that is
statutorily required by the NBFC's for registration?
Ans. According to Narasimham committee NBFC's require Rs.25,00,000 for registration.

Q.25. Which committee had worked for the recapitalization of Regional Rural Banks (RRB's)?
Ans. K.C. CHAKARABARTY worked for the recapitalization of RRB's.

Q.26. The authorized capital of NABARD in 2013 was raised up to what limit?
Ans. In the year 2013 the authorized capital of NABARD raised up to 20000 corers.

Q.27. The BASEL COMMITEE was formed in which year?

Ans. The BASEL COMITTEE was formed at the end 1974.

Q.28. Which bank comes under the category of APEX banks.

 Ans. Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development
(NABARD) come under the category of APEX banks.

Q.29. Which kind of operations are included in treasury operations?

Ans. The treasury operations include the following:-
 DEBT MARKET
 EQUITY MARKET
 MUTUAL FUNDS
 DERIVATIVES
 FOREX OPERATIONS
 TRADING

Q.30. What do you mean by CASH CREDIT?

Ans. CASH CREDIT is the system formed by the banks which allows the borrower to draw amount
up to
the specified limit.

Q.31. What do you understand by OVERDRAFT?

Ans. OVERDRAFT is the facility granted by bank to the customers of current account by which
they draw the amount more than the credit balance in their account.

Q.32. How many types of debit card do the banks provide to their customers in India?
Ans. The following are the types of debit cards provided by the banks in India are:-
 VISA CARD
 MAESTRO CARD 9211825282
 MASTERCARD
 RUPAY CARD

Q.33. Which bank is the settlement bank for CASH TREE?

Ans. BANK OF INDIA is the settlement bank in CASH TREE network.

Q.34. In term of banking what do you mean by LABs?

Ans. LAB stands Local Area Banks in banking terms. It is associated with local markets and acts as
host of financial services including savings, credit,
remittances, insurance etc.

Q.35. How many type of deposits does Indian banking deal with?
Ans. The Indian banking industries deal with the following types of deposits:-
 Term deposits
 Demand deposits
 Current deposits
 Savings deposits

Q.36. Classify the business of banking?

Q.45. Which system eliminates the physical movement of cheques and provides the efficient
method for cheque clearing?
Ans. "CHEQUES TRUNCATION SYSTEM" (CTS) is the system that eliminates the physical
movement of cheques and provides a secure and efficient method of cheque clearing.

Q.46. In which year Credit Guarantee Corporation was formed?

Ans. Credit Guarantee Corporation was formed in 1971.

Q.47. What is the old name of SYNDICATE BANK?

Ans. The old name of Syndicate Bank is CANARA INDUSTRIAL AND BANKING SYDICATE
LIMITED.

Q.48. What are the advances that the banks grant to their customers for their financial
assistance?
Ans. There are three types of advances that bank grant to their customers for their financial
assistance:-
 Cash credit
 Overdraft
 Discounting of bills

Q.49. What is the significance of IFSC code?

Ans. The acronym for IFSC is "Indian Financial System Code". It is an alpha numeric 11 digit codes
which uniquely identifies a particular bank branch in India.

Q.50. What is SWIFT?

Ans. The acronym for SWIFT is "The Society for Worldwide Interbank Financial
Telecommunication. SWIFT provides a financial messaging network between banks and other
financial institutions. 9211825282
RBI and its role questions and answers for bank recruitment

Q. 1. When RBI was established?

Ans. RBI was established on 1 April 1935 in accordance with the provision of the Reserve Bank of
India Act 1934.

Q. 2. What are the main functions of RBI?

Ans. Functions of RBI:

 It formulates implements and monitors the monetary policies.

 It maintains the price stability and ensures adequate flow of credit.
 It protects depositor's interest and provides cost effective banking services to the public.
 It manages the Foreign Exchange Management Act, 1999.
 It provides facility to external trade and payment.
 it issues and exchanges the currency and coin and destroys too except 1Rs.
 It acts as bankers for the central and state government banks.

Q. 3. What are RBI monetary policy objectives?

Ans. Monetary policy uses the instruments under the central bank to regulate the availability of cost
and use of money and credit. Its goal is achieving the specific economic objectives like low and
stable
inflation and promoting growth.
 RBI objectives: -

 To maintain the price stability.

 Ensure the flow of credit to the productive sector of the economy.
 Support the economic growth.
 Regulate the financial system.

Q. 4. When was RBI nationalized?

Ans. RBI was nationalized on 1 January 1949.
Q. 5. What are Direct Instruments of monetary policy?
Ans. Cash Reserve Ratio, Statuary Liquidity Radio and Refinance Facilities are the direct
instruments of
Monetary Policy.

Q.6. What are Indirect Instruments of monetary policy?

Ans. Liquidity Adjustment Facility, Open market operations, Market stabilization scheme, repo
rate, reverse
repo rate and bank rate the indirect instruments of monetary policy.

Q. 7. What is cash reserve ratio (CRR)?

Ans. Banks keep a certain proportion of their total assets in the form of cash, partly to meet their
statutory reserve requirement and partly to meet
their own day to day needs for making payments.
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Hence cash is held partly in the form of "cash on
fiend" and the partly cash in the form of balances with the RBI. The ratio of bank's balance with RBI
to the banks net demand and time liabilities is called CRR.

Q. 8. What is Statutory Liquidity Ratio (SLR)?

Ans. SLR Statutory Liquidity Ratio. It is the share of net demand and time liabilities that bank must
maintain in safe and liquid assets such as cash, gold, government securities etc. Every bank
has to
maintain at the close of business every day.

Q. 9. What is time liability?

Ans. Fixed deposits, cash certificates, cumulative and RDs, staff security deposits, deposit held as
securities for advances etc. are time liabilities.

Q.10 What is Open Market Operation?

Ans. Open market operation means purchase and sale of government securities by RBI from the
public
and banks on its own account_

Q.11 What are the objectives of SLR?

Ans. Objectives of SLR:
- To restrict expansion of banks credit.

 To increase banks investment in approved securities.

  To ensure solvency of banks.

Q.12. What is Liquidity Adjustment Facility?

Ans. It includes daily infusion and absorption of liquidity on repurchase basis through repo and
reverse
repo using government security as collateral.

Q.13 How many types of subsidiaries does RBI have?

Ans. RBI has two types' subsidiaries
 Fully owned subsidiary
 Majority stack subsidiary

Q. 14 Name the fully owned subsidiaries of RBI?

Ans. RBI has three fully own subsidiaries:
 National Housing Bank(NHB)
 Deposit Insurance and Credit Guarantee Corporation of I ndia(DICGC)
 Bharatiya Reserve Bank Note Mudran Pvt. Ltd.(BRBNMPL)

Q.15 Name the majority stack subsidiary of RBI.

Ans. National Bank for Agriculture and Rural Development (NABARD) is the only Majority Stack
Subsidiary
of RBI.

Q.16. How many types of Repos are available in International Market when classified with
regard to 9211825282
maturity of underline security, pricing, terms of repo etc.?
Ans. There are four types of repos are in International Market:
 Buy-sell back Repo
 Classic Repo
 Bond lending/borrowing Repo
 Tripartite Repo
Q. 17 What is Market Stabilization Scheme (MSS)?
Ans. In Market Stabilization Scheme large capital flow is absorbed through selling of short-dated
government securities and treasury bills.

Q.18 What do you mean by Repo rate?

Ans. Whenever the bank has any shortage of fund they can borrow it from RBI. Repo rate is the rate
at
which the bank can borrow the amount from
RBI.

Q.19 What is Reverse Repo Rate?

Ans. Reverse repo rate is the rate at which RBI borrows money from the Bank.

Q.20 What is Bank Rate?

Ans. Bank rate is the rate which RBI charges on the loan and advances extended to commercial
banks
and other financial intermediaries. It is a tool used by RBI to control the supply of money.
Q.21 Which is the new instrument launched by RBI to protect the saving of poor and middle
class
people from inflation and insensitive household sectors.
Ans. On 15 May 2013 RBI launched a new instrument called "Inflation Index Bonds (IIBs)" to
protect the
savings of poor and middle class people from inflation and insensitive household sectors.

Q.22 What is SCC?

Ans. The acronym of SCC is Selective Credit Control. It refers to the directives issued by RBI
Banking
Regulation Act 1949 to regulate the flow of bank credit against the selected commodities.

Q.23 On which factors SCC depend?

Ans. SCC depends upon the following factors:
 The availability of non-bank finance.
 The extent of effective credit restrictions
 The degree of shortfall in supply in relation to normal demands.

Q.24 What are the general techniques used by SCCs?

Ans. The general techniques used by SCCs are:

 Minimum margin for lending against security specified commodities is fixed.

 Ceiling on maximum advances to individual borrower against stock of certain
commodities. 9211825282
a Minimum discriminatory rates of interests prescribed for certain kinds of advances.
 Prohibition of clean advances for financing hoardings of sensitive commodities.
 Prohibition of the discounting of bills covering sale of sensitive commodities.

Q.25 How many printing presses for printing notes are available in India and name the
places where they are located?
Ans. There are four printing presses are available in India for printing notes. They are located at:-
 Dewas (Madhya Pradesh)
 Nasik (Maharashtra)
 Mysore (Karnataka)
 Salboni (West Bengal)

Q. 26 Name the authority that mint coins in India and also name the places where the minting
operation is processed?
Ans. The GOVERNMENT OF INDIA has the authority of minting coins under the advisory of RBI.
The
minting of coins is operated in the following
cities:-
 Mumbai Noida
 Kolkata
 Hyderabad

Q.27 What is WMA and what does it signifies?

Ans. WMA stands for "Way and Mean Advances". It is a short term loan from RBI to the
GOVERNMENT
OF INDIA which allows government to meet their financial requirements.

Q.28 Name the fund management scheme introduced by RBI which helps the banks in their
fund
management?
Ans. Two types of fund management schemes were introduced by the RBI which help the banks to
maintain their funds:-
 Centralised fund management system (CFMS)
 Transfer of funds across deposit account department (DAD)

Q.29 What is PARA-BANKING?

Ans. RBI permits the bank to perform some activities other than banking. This is known as
PARA-BANKING.

Q.30 Name some PARA-BANKING activities?

Ans. Following are some PARA-BANKING activities:-
 Mutual funds business
 Asset management
 Insurance business
 Merchant banking
 Factoring service
 Equity participation in venture capital
 Leasing 9211825282
Q.31 By which mean RBI did the OFF-SITE SURVEILLANCE?
Ans. RBI accomplishes the off-site surveillance by means of OFF-SITE SURVEILLANCE AND
MONITORING SYSTEM (OSMOS).

Q.32 Name the rating system given by RBI for the banking sector?
Ans. The rating system given by RBI for banking sector is known as CAMELS. The significance
of
CAMELS is as follow - C - Capital adequacy ratio
A - Asset quality (level of NPA) M Management effectiveness
E - Earning (profitability) L Liquidity
S - System and control

1. Name the three components of capital market?

Ans. There are three component of capital market are:-
 EQUITY MARKET
 DEBT MARKET
 DERIVATIVE MARKET

Q.2 Whichorganisation regulates capital market?

Ans. Security and exchange board of India (SEBI) regulates the capital market.

Q.3 What are the instruments of money market?

Ans. Following are the instruments of money market:-
 Call money
 Notice money
 Certificate of deposits (1989)
 Commercial papers (1990)
 Forward rate agreement / interest rate swaps
(1999)
 Bills rediscounting

Q. 4 Categorize the "Industrial Security Market"?

Ans. There are two categories of industrial security market:-
 Primary market (new issue market)
 Secondary market I stock market (old issue market or stock exchange)

Q. 5 What is "Gilt-Edged Market"?

Ans. The market refers to government and semi-government securities which are supported by RBI
and is
called GILT-EDGED market.

Q6. Name the types of "Repurchase Agreement"?

Ans. Following are the types of repurchase agreement:-

 Market repo
 RBI repo (LAF)
 Treasury bills
9211825282
 Inter-bank participation certificate (1988)
 CBLO (2003)
Q.6 Name the participants of CBLO?
Ans. Following are the participants of CBLO:-
 Scheduled commercial banks
 Co-operative banks
 Primary dealers (PDs)
 Select all-India financial institutions
 Insurance companies
 Mutual funds and other corporate

Q.7 What is the tenor of transaction of overnight market?

Ans. The tenor of transaction of overnight market is one working day.

Q.8 What is "FOREX" market?

Ans. FOREX market deals with the exchange of currency. With help of FOREX market we are able
to
meet the multi-currency requirements of market.

Q.9 Name the major institutions involved with the CREDIT market?
Ans. Following are the major institutions involves with the CREDIT market:-
 Banks
  Financial institutions
 NBFCs

Q.10 What is "STRIPS"?

Ans. STRIPS stands for "Separate Trading of Registered Interest and Principle of Securities". It is
basically a ZERO-COUPON where the investor receives payment at maturity only.

Q.11 on which day in the week does RBI conduct the auction to issue the treasury bills?
Ans. On every Wednesday RBI conducts auction to issue treasury bills.

Q.12 What are "COMMERCIAL PAPERS"?

Ans. COMMERCIAL PAPERS (CP) is an unsecured money market instrument issued in the form of
promissory notes.

Q.13 What is "CERTIFICATE OF

DEPOSITS"?

Ans. CERTIFICATE OF DEPOSITS (CD) is a negotiable money market instrument and is issued
in the
form of USANCE promissory note.

Q.14 What do we call a market instrument which has features of equity as well as debenture?
Ans. The market instrument which has the feature of both equity and debenture is called "HYBRID
INSTRUMENT". 9211825282
Q.15 What are the various forms of derivative instruments?
Ans. Following are the forms of derivative instruments:-
 Forward contract
 Options
 Swaps

Q.16 How many forms of SWAPS are there in derivatives, name them?
Ans. There are two forms of SWAPS in derivatives:
 Interest rate swaps
 Overnight index swaps

Q.17 What is "PARTICIPATARY NOTE"?

Ans. PARTICIPATARY NOTE (PN) is an instrument used by foreign funds. It is not used for
domestic
trading because it is not registered in India.

Q.18 What is dated government securities?

Ans. Dated government securities are the long term securities. They carry fixed or floating coupons
which
are paid on the face value and payable at fix time period.

Q.19 What is "ASSET SECURITISATION"?

Ans. ASSET SECURITISATION is the process through which illiquid assets are transformed into
a more
liquid form of assets and distribute to broad range of investor through capital market.
Q.20 Name the financial institutions that provide credit to various sectors of economy?
Ans. Following are the financial institutions that provide credit to various sectors of economy:-
 Commercial banks
 Regional rural banks (RRBs)
 Urban co-operative banks (UCBs)
 State co-operative banks (STCBs)
 District central co-operative banks (DCCBs)
 Primary agriculture credit society (PACS)
 State co-operative and agriculture rural development banks (SCSCARDBs)
 Primary co-operative and agriculture rural development banks (PCARDBs)
 Financial institutions
 Non-banking financial companies (NBFCs)

Q.21 What is "SPECIALIZED FINANCIAL INSTITUTION (SFI)"?

Ans. SPECIALIZED FINANCIAL INSTITUTIONS (SF1) have been set up to serve the increasing
financial
needs of commerce and trade in the area of VENTURE CAPITAL, CREDIT RATING
and LEASING.

Q. 22 Name the types of NBFCs registered with RBI?

Ans. Following are the types of NBFCs registered with RBI:-
 Equipment teasing company 9211825282
 Hire-purchase company
 Loan company
 Investment company

Q.23 What do you mean by "DELIVERY versus PAYMENT" (DvP)?

Ans. DELIVERY versus PAYMENT (DvP) is the mode of settlement of securities where the
transfer of
securities and the funds happens simultaneously, this ensure that unless the funds are paid,
security are
not delivered and vice-versa.

Q.24 Name the type of "ALL-INDIA

DEVELOPMENT BANKS" (AIDB)?

Ans. Following are the types of ALL-INDIA DEVELOPMENT BANKS:-

 Industrial development bank of India(IDBI)
 Industrial finance corporation of India ltd(IFCI)
 Small industrial development bank (SIDBI)
 Industrial investment bank of India ltd (11BI)

Q.25 Name some de-recognized stock exchange in India?

Ans. Following are some de-recognized stock exchange of India:-
 Hyderabad stock exchange
 Magadha stock exchange
 Saurashtrakutch stock (SKSE)
 Mangalore stock exchange

Q.26 What is a "Bonus Share"?

Ans. Shares issued by the companies to their share-holders free of cost by capitalization of
accumulated
reserves from the profit earned in the earlier year is called "Bonus Share".

Q.27 What do you mean by "Equity Shares"?

Ans. Equity shares are commonly referred to as ordinary share that also represent the form of
fractional
ownership in which a share-holder, as a fractional owner, undertakes the maximum
entrepreneurial risk
associated with a business venture.

Q.28 What are "Security Receipts"?

Ans. Security receipts means a receipt or other security issued by a securitisation company to any
qualified institutional buyer pursuant to a scheme evidencing the purchase or acquisition by
the holder
there of an undivided right, title or interest in the financial asset involved in securitisation.

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Q.29 What do you mean by "Bull" as regarding capital market?
Ans. If a person is optimistic and believes that stock will go up, he or she is called a "BULL" and is
said to
have a bullish outlook.

Q.30 What is cumulative preference share?

Ans. It is a type of preference stock in which the unpaid dividend accumulates. All arrear of
preference
dividend have to be paid out before paying dividend on equity shares.

Q.31 Categorize the NBFC based on the way they accept public deposits?
Ans. There are two types of NBFC based on their public deposits:-
 NBFC- deposit taking (NBFC-D)
 NBFC- non deposit taking (NBFC-ND}

Q.32 What are the important sources of long term finance?

Ans. Following are the important source of long-term finance:-
 Issue of shares
 Issue of debentures
 Loan from financial institutions
 Reinvestment of profits

Q.33 What do you mean by short term capital?

Ans. Short-term capital is required for a short period, less than a year. It involves financing assets
and
meeting day-to-day expenses.

Q.34 What are the important sources of short term finance?

Ans. Following are the important sources of long term finance:-
 Banks
 Trade credit
 Instalment credit

Q.35 What is "Special Data Dissemination Standard" (SDDS)?

Ans. SDDS is an international monetary fund standard to guide member that have access to
international
capital market in the provision of their economic and financial data to the public.

Q. 36 What is "TAP SALE"?

Ans. Under TAP SALE a certain amount of securities are created and made available for sale,
generally
with minimum price and sold to the market as bids are made.

Q.37 What do you mean by "HELD TILL MATURITY (HTM)"?

Ans. The securities acquired by banks with the intention to hold them up to maturity.

Q.38 What is "COUPON FREQUENCY"?

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Ans. Coupon payments are made at regular intervals throughout the life of a debt security and may
be
quarterly, half-yearly or annual payment.

Q.39 What is "Bond Ledger Account(BLA)"?

Ans. BOND LEDGER ACCOUNT is an account with the RBI or an agent in which the
government securities are held in a dematerialised form at
the credit of the holder.

Q.40 What is the tenor of market repo?

Ans. The tenor for market repo ranges from one day to one year.
Q.2 What are the features of Negotiability?
Ans. Features of Negotiability:
 Freely transferable by delivery (when it is bearer).
 Freely transferable by endorsement (when it is an order instrument).
 The transferee taking the instrument in good
faith.

Q.3 What is Promissory Note (PN)?

Ans. It's an instrument in writing which contains an unconditional undertaking signed by the maker
to pay a
certain sum of money to the order or the bearer of instrument. The Promissory Notes require
being
stamped ad per Indian Stamp Act.
Q.4 How many types of Promissory Notes are there?
Ans. Types of Promissory Note: l. Demand Promissory Note 2.
UsancePromissory Note

Q.5 What is Demand Promissory Note?

Ans. The Promissory Note which is payable immediately on demand is called "Demand
Promissory Note".

Banking operations - questions and answers for bank recruitment

Q. 1 Name some negotiable instruments.

Ans. The negotiable instruments include
 promissory note
 bill of lading
 Bank draft/ pay order/bankers cheque.
 Railway receipts
 Dock warrant
 Warehouse receipt
 Certificate of deposit
 Commercial paper
 Treasury bills
 Hundi 9211825282
Q.6 What is Usance Promissory Note?
Ans. The Promissory Note which is payable after a predefined definite period is called "Usance
Promissory Note".
Q.7 How many parties are required in Promissory Notes?
Ans. Basically it requires two parties. The one is maker who promises to pay and the other is payee
to
whom it is payable. For example a person take loan from the bank then the "person" is the
"maker" and
"the bank" is "payee".

Q. 8 What is "Bill of Exchange" (BoE)?

Ans. It's an instrument containing an unconditional order signed by the maker directing a certain
person to
pay a certain sum of amount only to the bearer of that instrument.

Q.9 How many types of bills are used in Banking Operations?

Ans. Following are the types of Bills used in Banking Operations:
 Inland bills and Foreign bills
 Time bills and Demand bills
 Trade bills and Accommodation bills
  Clean bills and Documentary bills.

Q.10 What are "Inland bills"?

Ans. Inland bills are contract agreements which define the information related to the transportation
of
goods overseas. Inland bills must be drawn on a person resident in India although it is payable
outside
India The essential condition is that it must be drawn in India. For example a bill is drawn in
Nagpur and
payable in Hyderabad by an importer in New York is an inland bill.

Q.11 What is "Foreign Bill"?

Ans. A foreign bill is a financial instrument which is drawn at in country and payable in another
country. Any
bill which is not an inland bill is a "Foreign Bill". For example a bill drawn in London and
payable in Bhopal by a resident Indian is a foreign bill.

Q.12 What is "Accommodation Bill"?

Ans. Accommodation bill is the "bill of exchange" by the third party which is also known as an
"Accommodation party" or "Accommodation endorser" who acts as a guarantor. This kind of
bill is not a
genuine trade bill and it is drawn to accommodate a known party. After actual sale of
goods, when a bill is
drawn by a seller and accepted by another person claim to be buyer is accommodation
bill. 9211825282
Q.13 What is "Hundi"?
Ans. Hundi is kind of "bill of exchange". In Hundi any seller sells his good under bill of exchange.
These bill

of exchange are known as "Hundi". Then the seller sends the "Hundi" to the buyer for its
acceptance.
These bills of exchange are generally written in native language of that place and governed by
local usage
and practices. Generally four types of Hundi are
used.

I. DarshaniHundi- It is similar to the demand

bills.
2. MiadiHundi- It is similar to the usance bills.
3. NamyogHundis- It is similar to the order instruments.
4. Khokha- which has been paid and cancelled.

Q.14 What is "Cheque"?

Ans. A cheque is an instrument drawn on a specified bank and it is only payable on demand.

Q.15 How is Cheque is different from BoE?

Ans. Cheque is different from bill of exchange in following ways:

- Cheque is valid only 6 months from the date of

issue.
 Cheque is payable to the bearer on demand.
 Cheque is drawn in a bank.
 Notice of dishonor is not necessary in cheque.

Q.16 When should banks not pay the Cheque?

Ans. Bank should not pay a cheque in the following cases:
 Death of the drawer.
 Insane customers
 Insolvent customers
 On receipt of valid stop payment instruction.

 When cheque is post-dated.

 When account has insufficient fund.

Q.17 What is Stale Cheque?

Ans. If the cheque is not presented for payment for a period of 6 months from the date of its
issuance, it
is then considered as Stale Cheque.

The validity of the cheque can be reduced by the drawer, like valid for 3 months but the
maximum validity 9211825282
of any cheque is 6 months.

Q.18 What is "Saving Bank Account"?

Ans. If a person has limited income and he wants to save some money for future, then the account
he
opens is a Saving Bank Account. The account can be opened with the minimum initial
deposit amount
decided by the bank. The account holder can deposit the money anytime. He can also withdraw
the
money by withdrawal form or ATM or cheque. The rate of interest varies from bank to bank
and changes
time to time.

Q.19 What is "Current Deposit Account"?

Ans. Big institutions, companies, businessman etc. normally open their current deposit accounts.
There are some restrictions on withdrawal in saving
accounts and in current accounts there are no such restrictions.

Current account can be opened with some initial amount decided by the bank. Here the bank
does not pay
any interest on their balance, in fact the bank charges the customer certain amount each
year as
Operational Charge. It also provides the facility of withdrawing excess of the balance of
deposit.

Q. 20 What is "Overdraft Facility"?

Ans. It is a facility provided by the banks that permits an account holder to use or withdraw more
than
they have in their accounts, but they can't withdraw exceeding the maximum minus
balance.This facility is
called Overdraft Facility.

Q.21 What is "Fixed Deposit Account"?

Ans. This facility allows us to save money for long time. In saving accounts the rate of interest is
less, but
in fixed deposit account the rate of interest is higher. It is also known as term deposit account.
The
depositor can deposit the money for long periods like 7 to 10 years. During this period
withdrawal is not
allowed however the depositor can encash the money before the maturity period but at that
time the rate
of interest will be less.

Q. 22 What is "Recurring Deposit Account"?

Ans. In this type of account the depositor saves regularly and in return gets a fair return of
deposit. While
opening this account the deposit per month is fixed. We can deposit the amount once in the
month on a 9211825282
fixed date and the amount is also fixed. The total amount with interest we can receive after
the maturity.
The rate of interest in recurring deposit account is higher than the saving account. The account
can be
opened by a person individually as well as jointly with another.

Q. 23 What are "Non- performing assets" (NPA)?

Ans. The asset which is not producing income is a "Non-Performing Asset". It is an asset or an
account of
a borrower which is considered as loss asset or doubtful by the bank account or the financial
institution is
called "non-performing asset".

Q. 24 What is 90 days overdue?

Ans. It's a norm for the identification of the "Non-performing asset" (NPA) starting 31 March
2014.

The norm is as follow:

 Interest or installment of principal remain overdue for more than ninety days in respect of
term loan.
  The account remains out of order for the period of more than ninety days.
 The bill remains overdue for the period of more than ninety days.
 Any amount to be received is due for more than ninety days.

Q. 25 What is "Money Laundering"?

Ans. The process of converting illegal money into legal money is Money Laundering. According to
Section
3 of the Prevention of Money laundering Act
2002 as.

"Whosoever directly or indirectly attempts to indulge or knowingly assists or is involved in

any process or
activity connected with the proceeds of crime and is projecting it as the untainted property shall
be guilty
of the offence of money laundering".

Q. 26 What are the common factors of "Money Laundering"?

Ans. Generally there are four factors of money laundering:

 The true ownership and real source of money is not revealed.

 The launderers change the form of the proceeds in order to shrink the huge volume of cash
generated
by the initial unlawful activity.
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 The trail left by the process is not known so that it make it difficult to follow the money from
the
beginning to end.
 Constant control is maintained on the money.

Q. 27 What are the stages of "Money Laundering" process?

Ans. The following are the stages of "money laundering" process:

1. Placement stage:-lt is the first introduction of entry for funds derived for any criminal
activities.
2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of illegal
proceed. It
creates a complex network of transactions which attempts to not reveal the link between the
initial entry

and the end of the money laundering cycle.

3. Integration stage: - This process achieves the appearance of total legitimacy of funds
thereby it refers

to the return of funds to the legitimate economy for later extraction.

Q. 28 Give few ways of "Money Laundering"?

Ans. Following are the few ways of money laundering:
  Frequent exchange of cash into other currencies.
 Large withdrawals from inactive account.
 Transferring large sum of money to or from abroad.
 More use of safe deposit facilities.
 Customer having several accounts in different banks but in same location.

Q. 29 What is "BANKNET"?
Ans. It's a kind of payment network established by RBI. It was launched during 1991 in India. In
this
network the user can BANKNET from their premises through leased or dial up lines at the
local centers.
Here the messages of banking transactions are transferred in the form of codes for the
settlement of the
transaction and advice. It also provides access to SWIFT through its system.

Q. 30 What is "RBINET"?
Ans. It is a communication system running on BANKNET and RBI NET is a client running a
personal
computer called RBI NET. It can communicate with its server over the dedicated leased or
dial-up lines.

Q. 31 What is "I-net"?
Ans. I-net was opened in 1983. It is owned by the Department of Telecommunication which uses
Packet 9211825282
Switching Public Data Network (PSPDN). PSPDN is a kind of data sending technology. I-
net uses
telephone connections and satellites for communication which replaces the slow speed data
communication. This technology connects major metropolis and international networks.
Q. 32 What is "NICNET"?
Ans. MONET stands for National Informatic Centre Network, which was set up in 1975. It
promotes
information culture which is a government organization and work for government
organizations. It provides multiple facilities to finance, agriculture, industry, commerce by providing
various applications. Currency chest operations in banks are performed by NICNET.

Q. 33 What is "INFINET"?
Ans. The abbreviation for INFI NET is Indian Financial Network. It was developed by RBI
sponsored
organization which provides fast and secure intra —bank and inter-bank communication
system.

Q. 34 What is "SPNS"?
Ans. The full form of SPNS is Shared Payment Network System. It provides round-the-clock
banking
convenience to customer of any bank performing basic banking functions like cash
withdrawal, balance
enquiry etc. at any ATM belonging to any bank.
Q. 35 Which banking services can be used through Information Technology (IT)?
Ans. Following banking services can be achieved by using IT:
 Faster remittance services
 Home banking
 Tele- banking
 Cash management products
 Banking online

Q. 36 What is "Digital Signatures" (DS)?

Ans. Digital Signature is used for security purpose and it is equivalent to the handwritten signature. It
is a
signature in electronic form attached to an electronic record. Digital signature identifies
the origin of the
message and maintain the integrity of message. It defines authentication of an electronic
record by a
person whose name the digital signature certificates. In India Information Technology Act
2000 considers
digital signature as personalized thumb .print.

Q. 37 What is "Mobile Banking"?

Ans. Mobile banking provides us the ease of carrying out certain banking transactions through their
mobile
phone. This facility is provided by the banks. Many operations can be performed by using
mobile banking
9211825282
like checking account balance, paying bills, request for cheque book. Stop payment
instruction, summaries
of last three transactions, transferring money to other account etc.

Q. 38 What is "Electronic Fund Transfer System" (EFTS)?

Ans. Electronic fund transfer provides us to transfer fund electronically replacing the paper
instruments.
The electronic fund transfer is fast and easily available. It saves time of customer's standing
in queue. The
products of EFTS includes:-

- VVTs- wireless transfers.

 ATM- Automated Trailer Machine

 CDs- Cash Dispensers
POS- Point of Sale terminals
 Home banking

Q. 39What is "Smart Card"?

Ans. The Smart Card is an Integrated Circuit Card (ICC) to store information. It is a cash card or we
can
say 'electronic purse' which is a pre-paidcash card. The card provides an option to the
customers for
debit and credit facilities. These cards can be reloaded by ATM or by telephone. It reduces the
need of
carrying cash for shopping and enables the card holder to increase the amount at any time.

Q. 40What is "Credit Card"?

Ans. it is an instrument of payment. The customer gets some credit on the card which he can use
for
shopping, ticket booking, encashment etc. The credit cards are of different types having
different credit
limits depending upon the bank.

Q. 41 What is "Debit Card"?

Ans. It is a payment card used to obtain cash, purchasing goods and services automatically debiting
the
payment to the card holder's bank account.

Q. 42 What are the advantages of "Debit Card"?

Ans. The advantages of Debit Card:
 No need to carry cash.
 Quick and less complicated than using cheque.
 Used for withdrawal of cash.
 It can be Issued to any individual having bank account.

Banking Finance and Economy - questions for bank recruitment

Q. 1 What is Inflation? 9211825282

Ans. The rise in the prices of goods or service in an economy over a certain period of time is
known as
inflation.

Q. 2 Name the types of "Inflation"?

Ans. Following are the types of inflation:-
 Wage inflation
 Price power inflation
 Cost-push inflation
 Sectorial inflation
 Stagflation
 Mild inflation
 Hyper-inflation

Q. 3 What are the effects of "Inflation"?

Ans. Following are the effect of inflation:-
 It decreases the real value of money
 It discourage investment and savings
 It leads to shortage of goods
 Mitigate economic recessions
 Reduces the level of debt

Q. 4 What is "Stagflation"?
Ans. It is the situation in which inflation rises continuously even though there is recession in the
economy.

Q. 5 What is "Deflation"?
Ans. Deflation is the theory which deals with the general reduction in the price level of
particular goods.

Q. 6 What is non-performing assets (NPA)?

Ans. Non-performing assets mean an asset or account of borrowers which has been classified by the
bank as sub-standard, doubtful and loss assets.

Q. 7 According to KYC guidelines which are the three documents that are mandated by
RBI?
Ans. Following are the documents that are mandated by RBI in accordance to KYC guidelines:-
 Photograph
 Proof of identity
 Proof of address

Q. 8 What are the three parameters on which CAR depends?

Ans. Following are the three parameters on which CAR depends:-

 Tier I capital
 Tier 2 capital
 Risk weighted ratio
9211825282
Q. 9 What is "Overseas Banking"?
Ans. Domestic banks if working out of the country then it is called as overseas banking.

Q. 10 What are the advantages of "Off-shore Banking"?

Ans. Following are the advantages of off-shore banking:-
 Strong privacy
 Less restrictive legal regulation
 Low or no taxation
 Easy access to deposits
 Protection against local political or financial instability

Q. 11 What is "Merchant Banking"?

Ans. The private equity activity of the bank is known as merchant banking.

Q. 12 What is "Universal Banking"?

Ans. It is a kind of investment service that includes services related to savings and loan.

Q. 13 What services are provided by "Virtual Banking"?

Ans. Following are the services provided by virtual banking:-
 Telephone banking
 Online banking
 Automated teller machine (ATM)
 Mail banking
  Mobile banking

Q. 14What are the indicators of good SHGs (Self Help Groups)?

Ans. Following are the indicators of good SHGs:-
 Homogeneous membership
 No discrimination
 Small membership
 Regular attendance
 Transparency in functions
 Set of byelaws
 Thrift
 Utilising savings for loaning

Q. 15How many "Bullion Markets" are there in India?

Ans. There are four bullion markets in India:-

 National commodity and derivative exchange limited (NCDEX)

 National multi-commodity exchange of India limited (NMCEIL)
 Multi-commodity exchange of India (MCX)
 Indian bullion market

Q. 16 What are "Carbon Funds"?

Ans. Work to develop viable, flexible market mechanisms to reduce greenhouse gas emissions
under the
Kyoto protocols.
9211825282
Q. 17 What is "Cheap Money"?
Ans. It indicates a scenario when bank rate and other rate of interest are low.

Q. 18 What is "Buy Side"?

Ans. It is the part of securities business in which institutional order generates.

Q. 19 What is "Demand Draft"?

Ans. It is the bill of exchange payable at sight.

Q. 20 Classify the balance of payment?

Ans. Balance of payment is classified into two parts:-
 Current account
 Capital account

Q. 21What is "CCIL"?
Ans. Acronym for COIL is clearing corporation of India limited. It is the clearing agencies of
government

securities. It acts as centraJ counter party (CCP) for all transaction in government securities by
interposing
itself between two counterparties during settlement.
Q. 22 What is "Tier 1 Capital"?
Ans. Tier 1 capital is a core capital that includes equity capital and disclosed reserves.

Q. 23 What is "Equity Capital"?

Ans. An equity capital includes instruments that cannot be redeemed at the option of holder.

Q. 24 What is "Tier 2 Capital"?

Ans. It is the secondary bank capital that includes item such as undisclosed reserves, general loss
reserves, subordinated term debt etc.

Q. 25 What is the acronym of "MIBOR"?

Ans. Acronym for MI BOR is "Mumbai Inter-Bank Offer Rate".

Q. 26 What is the capital structure of RRBs?

Ans. Following shows the capital structure of RRBs:
 50% with government of India
 15% with the state government
 35% with the sponsor bank

Q. 27 What is "Door-to-Door Banking"?

Ans. Delivering banking and financial service at doorsteps of the common man is known as door-
to-door
banking
9211825282
Q. 28 What is "LaghuUdhami Credit Card (LUCC) Scheme and its features?
Ans. "LaghuUdhami Credit Card Scheme is a hassle-free credit facility for small business, retail
traders,
self-employed and small industrial unit. It was launched on 21 Nov 2001 by Government.

Features of LUCC Scheme:

 Existing customers with satisfactory track record with working capital limit up to 2 lac fir
the last three
years are eligible for the card.
 The credit cards limit is fixed at 20% of the annual turnover declared for tax purpose.
 For professional the card limit is 50% of the gross annual income.
 Maximum per party limit is Rs. 2 lac
 The credit card limit is valid for three years.
 The banks will conduct internal reviews annually.
 Enhancement of limit is based on the operations by the bank.

Q. 29 What is Credit Guarantee Funds for SSIs and its features?

Ans. Credit Guarantee Funds for SSIs was introduced in 2000-01 and later extended by lending
institutions to eligible borrowers has been formed by Central Government and SI DBI
for covering
collateral free credit facilities.

Following are the features of Credit Guarantee Funds for SSIs:

  Eligible borrowers are the new or existing SS1 units including IT and software industries.
The amount of
credit facilities are based on the way of working capital not exceeding 25 lacs.
 Guarantee cover is the maximum cover available per eligible borrower which shall not exceed
75% of the amount in default in respect Of credit facilities.
 Account of default would mean the principle amount of outstanding in the account of the
borrower for
Working capital or Term Loan including interest.
 The lending institution has to apply for a guarantee cover within 90 days from the date
of sanction.

 Trust can terminate its liabilities in certain cases such borrower becoming ineligible.
· Lending institutions shall submit statements or information's as required by the trust.

Q. 30 What are "Benami" transactions?

Ans. In this type of transaction any property, movable or immovable is transferred by one person to
another for a consideration paid by a 3rd person. This type of transaction is prohibited under
Benami
Transaction (Prohibition) Act 1998.

Q. 31 What is PAN number and where we can use PAN number?

Ans. A PAN is a 10 character alphanumeric number allotted to a tax payer who is eligible to file
the income
9211825282
tax return. The PAN number is used for the following financial transactions:
 Sale or purchase of any immovable property valued 5 lac or more.
 Sales or purchase of Motor Vehicle or Vehicle.
 One time deposit exceeding Rs. 50000 with banking company.
 A contract of value exceeding Rs. 10 lac for sale or purchase of securities.
 Opening an account with a banking company.
 Payment to hotel bills against an amount of 25000 at one time.

Q. 32 What is "State Development Loans (SDL)"?

Ans. SDLs are the market borrowing by state government. RBI co-ordinates the actual process of
selling
these securities. Each state is allowed to issue securities up to certain limit each year.

Q. 33 What is "Nostro Account"?

Ans. A Nostro account is a bank account established in foreign country usually in the currency of
that
country for the purpose of carrying out transaction there.

Q. 34 What is "DEMAT Account"?

Ans. DEMAT account is used for buying and selling of stocks.

Q. 35 Name the types of money?

Ans. Following are the types of money:-
 Commodity money
  Representative money
 Fiat money
 Commercial bank money
 Narrow bank money

Q.36 How many types of cheques are there?

Ans. There are four kinds of cheques:-
 Open cheque
 Crossed cheque
 Bearer cheque
 Order cheque

Q. 37 How many series of consumer price index (CPI) are there?

Ans. There are four series of consumer price index:-
 CPI UNME (urban non-mutual employee)
 CPI AL (agricultural labourer)
 CPI RL (rural labourer)
 CPI IW (industrial worker)

Q. 38 What is "Reflation"?
Ans. Reflation is the act of simulating the economy by increasing the money supply or by reducing
taxes.

Q. 39 What is "Biflation"?
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Ans. Biflation is a state of economy where the process of inflation and deflation occurs
simultaneously.

Q. 40 Name the methods used to "Control the Inflation"?

Ans. Following are the methods that are used to control the inflation:-

 Monetary policy
 Fixed exchange rates
 Gold standard
 Wage and price control

Q. 41 What is "Funding Volatility Ratio"?

Ans. It is the ratio of liquid assets to current and savings deposits.

Q. 42 What is "ALCO"?
Ans. Acronym for ALCO is "asset-liability management committee". It is a strategic decision
making body,
formulating and overseeing the function of asset liability and management (ALM) OF BANK.

Public finance and budget process - questions for bank recruitment

Q. 1 What is budget?
Ans. The 'Budget System' in India was first introduced on 7th April 1860 by James Wilson, the
first Indian

Finance Member. The budget is the 'Statement' of the estimated receipts and expenditure of
Government
for that year. This 'Statement' is calledthe "Annual Financial Statement".

Q. 2 What points are covered in the "Annual Financial Statement"?

Ans. The "Annual Financial Statement" consists of:
 Statements of expenditure.
 Ways and means to raise the revenues.
 An analysis of the actual receipts and expenditure of the closing year.
 The causes of any surplus or deficit in relation to such year.
 An explanation of the economic policy.
 Spending program of the government for the coming year.
 Prospects of revenue.

Q. 3 How is the "Budget" processed?

Ans. In our parliament two budgets are presented.
1. Railway budget
2. General budget
Both budgets are presented in LokSabha. The Railway Budget is presented by the 'Minister
of Railway'
and the General Budget is presented by the 'Finance Minister'. The Budget speech is
represented in two 9211825282
parts:

 PART A —"General Economic Survey" and

 PART B —"taxation proposals".

One copy of the budget is presented in RajyaSabha also. After few days the discussion starts
on the
presented Budget. Budget was discussed in two stages:

 General discussion followed by detailed discussion and

 Voting on demands for grant.

After receiving 'demands for grants' and detailed discussion by the different ministries the
budget is
processed.

Q. 4 What are "Revenue Receipts"?

Ans. These are the receipts collected by the government from direct and indirect tax, interest
dividends,
profits from investments and from other receipts.

Q. 5 What are "Capital Receipts"?

Ans. These receipts are collected from the loans raised from the market, borrowings from RBI,
external
assistance from Foreign Governments, recoveries of loans and advances etc.

Q. 6 What do you mean by "Capital Expenditure"?

Ans. It's the expenditure incurred on acquisition of assets and investments, loans and advances to
State
Governments.

Q. 7 What is "Capital Budget"?

Ans. It consists of capital receipts, payments, and incorporate transactions in the Public Account.

Q. 8 What do you mean by "Plan Expenditure"?

Ans. It is the outline of the various schemes and programs formulated by the various ministries
under
5-years plan.
Q. 9 What do you mean by "Non-plan Expenditure"?
Ans. This is the outside expenditure incurred in keeping with the program formulated under the
5-years plan.

Q. 10 What is "Zero Based Budget (ZBB)"?

Ans. The method of preparing cash flow budgets and operating plans which starts every year with
the
lowest level in the organization for the budget or no pre authorized funds is prepared called
ZBB. It 9211825282
offers more variety of choices. It increases the participation on manager and its goal is more
sharply established and alternative means are explicitly considered.

Q. 11 What is "Appropriation Bill"?

Ans. After the "demands for grants" are voted, the Parliament approves the withdrawal from the
Consolidated fund of the amount for which the votes were collected. Getting the amount from
the
Consolidated Fund is sought through "Appropriation Bill".

Q. 12 What is "Consolidated Fund"?

Ans. It is the most important of all government funds. All government expenditures are made from
this
fund except the items met from 'Contingency fund' and Public Account Fund'. No money
can be
withdrawn from this fund without Parliament's approval.

Q. 13 What is "Contingency Fund"?

Ans. Any urgent expenditure is met from this fund. Rupees 500 crore fund is at the disposal of the
president. If any unforeseen expenditure is incurred from this fund requires approval from
the parliament
and amount withdrawn is returned to the fund from consolidated fund.

Q. 14 What is "Public Account Fund"?

Ans. This fund is to account for flows for those transactions where the government is merely acting
as a
banker. The example is provident funds, small savings etc. These funds do not belong to fund
to
government but the government payback it at some time to their rightful owners. On
expenditure from this
account Parliament approval is not required.

Q. 15 What is "Budgetary Deficit"?

Ans. The Budgetary Deficit represents the excess of aggregate expenditure over aggregate receipts
for
both capital and revenue.

Q. 16 What is "Fiscal Deficit"?

Ans. It refers to the excess of all expenditures, which includes the capital and revenue plus net
lending
over total revenue receipts and external grants. This explains the total expenditure and
borrowing by the
government.

Q. 17 What is "Primary Deficit"?

Ans. The 'Primary Deficit' indicates the precise xtent to which current fiscal action affects the
indebtedness of Central Government. The formula for measuring it is interest payment
minus interest
receipts. 9211825282
Q. 18 What is "Revenue Deficit"?
Ans. Revenue Deficit is the difference between the total of revenue expenditure including both plan
and
non-plan over the receipts on revenue account.

Q. 19 What is "Monetised Deficit"?

Ans. The Monetised Deficit represents the changes in the borrowing of the Central Government from
the
RBI, so that it captures the monetary impact of fiscal operations.

Q. 20 What is "Rule of Lapse"?

Ans. The rule of lapse says that all the appropriations granted by the Parliament expire at the end of
the
financial year. No deduction of unspent budget can be appropriated for meeting the demands
in the next
financial year. Hence all the utilized funds within the financial year 'lapse' at the end.

Q. 21 What is "Revenue of Central Government"?

Ans. The revenue of Central Government is the receipt estimate on revenue account. This account
is
divided into two parts: (A) tax. revenue (B) non tax revenue,
Q. 22 In how many parts "Tax Revenue" is divided?
Ans. The tax revenue is divided into three parts:
 Tax on income and expenditure.
 Tax on assets and capital transaction.
 Tax on goods and services.

Q. 23 In how many parts "Non-Tax Revenue" is divided?

Ans. The non-tax revenue is divided into two parts:
 Fiscal and other services.
 Interest receipts, dividends and profits.

Q. 24What are different types "Tax Receipts"?

Ans. Tax comes under "Tax Receipts":-
 Income tax
 Corporation tax
 Estate duty
 Gift tax
 Custom duty
 Excise duty
 Sales tax

Q. 25What are different types of "Non-tax receipts."?

Ans. Types of Non-Tax Receipts:-
 Fees, license and permits 9211825282
 Escheat
 Special Assessment
 Fines and Penalties
 Income from Public Enterprises
 Gifts and Grants

Q. 26 What is "Income Tax"?

Ans. It is the revenue received from the personal income and is distributed between the Centre and
the
State. It is not collected from every individual, but the amount depends upon the income of
the individual.
Income tax is basis on the 'ability to pay' principle.

Q. 27What is "Interest Tax"?

Ans. This tax was abolished by government in 1985 but it was reintroduced again as non-
inflationary
measure. This tax in imposed on gross interest income of lending institutions like banks,
public finance
institutions and finance companies.

Q. 28 What is "Corporation Tax"?

Ans. This tax is imposed on the income of small big companies and it goes to Central Government.
 Q. 29 What is "Fringe Benefit Tax (FBT)"?
Ans. Many companies give perquisites benefits like club facilities as ordinary business expenses,
which was escaped from the tax. This tax was
introduced in 2005-06 and now the employ have to pay tax (FBT)
on a percentage of the expenses incurred on such perquisites.

Q. 30 What is "Wealth Tax"?

Ans. This tax was abolished by Mr. Manmohan Singh in 1992-93 budgets. It is taken on the
productive
assets and limited it to non-productive assets like Guest house, residential house, jewelry
etc.

Q. 31 What is "Asset Duty"?

Ms. This tax was abolished by Mr. V P Singh in 1985. It is imposed on the assets held by the
individual. It

is collected by the Centre but transferred to the

State.

Q. 32 What is "Securities Transaction Tax (STT)"?

Ans. In this tax the investor has to pay small tax on the total consideration paid in share transaction.
Sale of any assets like shares, property etc. results in profit and loss. In 2004-05 budgets
the government
abolished long term capital gains tax on share and replaces it with STT
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Q. 33 What is "Banking Cash Transaction Tax (BCTT)"?
Ans. BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single
day.

Q. 34 What is "Custom Duty"?

Ans. Tax against imports is called custom duty. Custom duties levied to protect the domestic industry
in
retaliation against measures by other countries
etc.

Q. 35What is "Union Excise Duty"?

Ans. These duties are imposed on goods manufactured in the country by the Central
Government. These
goods are exempted from union excise duties. Excise duties are on sugar, cotton, tobacco,
textiles etc.

Q. 36 What is "Service Tax"?

Ans. It is tax on services like telephone bills, hotel bills etc.

Q. 37 Give examples of "Direct Tax"?

Ans. Income tax, fringe benefit tax, securities transaction tax and banking cash transaction tax are
the
 examples of direct tax.
Q. 38 What is "Ways and Means Advance (WMA)?
Ans. RBI's one of the functions is that it acts as banker for both State and Central Government.
It provides temporary support to tide over
mismatches in their receipts and payments in the form of
advances.

Q. 39 What is "Central Plan"?

Ans. These are the annual plans essentially the five year plan broken down into five annual
installments.
By the help of these plans government achieves their objectives of the five year plan. The
government
supports the central plan which is known as budget support.

Q. 40 What is "CENVAT"?
Ans. This scheme reduces the cascading effect of indirect taxes on finished products.
Next » Banking interview — Areas emphasized upon by the panel and questions asked

Next » RBI and its role

Q. 1 Name some negotiable instruments.

Ans. The negotiable instruments include
 promissory note
 bill of lading 9211825282
 Bank draft/ pay order/bankers cheque.
 Railway receipts
 Dock warrant
 Warehouse receipt
 Certificate of deposit
 Commercial paper
 Treasury bills
 Hundi

Q. 2 What are the features of Negotiability?

Ans. Features of Negotiability:

 Freely transferable by delivery (when it is bearer).

 Freely transferable by endorsement (when it is an order instrument).

 The transferee taking the instrument in good
faith.

Q. 3 What is Promissory Note (PN)?

Ans. It's an instrument in writing which contains an unconditional undertaking signed by the maker
to pay a
certain sum of money to the order or the bearer of instrument. The Promissory Notes require
being
 stamped ad per Indian Stamp Act.

Q. 4 How many types of Promissory Notes are there?

Ans. Types of Promissory Note:
1. Demand Promissory Note
2. Usance Promissory Note

Q. 5 What is Demand Promissory Note?

Ans. The Promissory Note which is payable immediately on demand is called "Demand
Promissory Note".

Q. 6 What is Usance Promissory Note?

Ans. The Promissory Note which is payable after a predefined definite period is called "Usance
Promissory Note".

Q. 7 How many parties are required in Promissory Notes?

Ans. Basically it requires two parties. The one is maker who promises to pay and the other is payee
to
whom it is payable. For example a person take loan from the bank then the "person" is the
"maker" and
"the bank" is "payee".

Q. 8 What is "Bill of Exchange" (BoE)?

Ans. Its an instrument containing an unconditional order signed by the maker directing a certain
person to 9211825282
pay a certain sum of amount only to the bearer of that instrument.
Q. 9 How many types of bills are used in Banking Operations?
Ans. Following are the types of Bills used in Banking Operations:
 Inland bills and Foreign bills
 Time bills and Demand bills
 Trade bills and Accommodation bills
 Clean bills and Documentary bills.

Q. 10 What are "Inland bills"?

Ans. Inland bills are contract agreements which define the information related to the transportation
of
goods overseas. Inland bills must be drawn on a person resident in India although it is payable
outside
India. The essential condition is that it must be drawn in India. For example a bill is drawn in
Nagpur and
payable in Hyderabad by an importer in New York is an inland bill.

Q. 11 What is "Foreign Bill"?

Ans. A foreign bill is a financial instrument which is drawn at in country and payable in another
country. Any
bill which is not an inland bill is a "Foreign Bill". For example a bill drawn in London and
payable in Bhopal by a resident Indian is a foreign bill.
Q. 12 What is "Accommodation Bill"?
Ans. Accommodation bill is the "bill of exchange" by the third party which is also known as an
"Accommodation party" or "Accommodation endorser" who acts as a guarantor. This kind of
bill is not a
genuine trade bill and it is drawn to accommodate a known party. After actual sale of
goods, when a bill is
drawn by a seller and accepted by another person claim to be buyer is accommodation
bill.

Q. 13 What is "Hundi"?
Ans. Hundi is kind of "bill of exchange". In Hundi any seller sells his good under bill of exchange.
These bill

of exchange are known as "Hundi". Then the seller sends the 'Hundi" to the buyer for its
acceptance.
These bills of exchange are generally written in native language of that place and governed by
local usage
and practices. Generally four types of Hundi are
used

1. DarshaniHundi- It is similar to the demand

bills.
2. MiadiHundi- It is similar to the usance bills.
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3. NamyogHundis- It is similar to the order instruments.
4. Khokha- which has been paid and cancelled.

Q. 14. What is "Cheque"?

Ans. A cheque is an instrument drawn on a specified bank and it is only payable on demand.

Q. 15 How is Cheque is different from BoE?

Ans. Cheque is different from bill of exchange in following ways:
 Cheque is valid only 6 months from the date of
issue
 Cheque is payable to the bearer on demand.
 Cheque is drawn in a bank.
 Notice of dishonor is not necessary in cheque.

Q. 16. When should banks not pay the Cheque?

Ans. Bank should not pay a cheque in the following cases:
 Death of the drawer. - Insane customers - Insolvent customers
 On receipt of valid stop payment instruction.
 When cheque is post-dated.
 When account has insufficient fund.

Q. 17 What is Stale Cheque?

Ans. If the cheque is not presented for payment for a period of 6 months from the date of its
issuance, it is then considered as Stale Cheque.
 The validity of the cheque can be reduced by the drawer, like valid for 3 months but the
maximum validity of any cheque is 6 months.

Q. 18 What is "Saving Bank Account"?

Ans. If a person has limited income and he wants to save some money for future, then the account he
opens is a Saving Bank Account. The account can be opened with the minimum initial deposit
amount decided by the bank. The account holder can deposit the money anytime. He can also
withdraw the money by withdrawal form or ATM or cheque. The rate of interest varies from bank to
bank and changes time to time.
Q. 19 What is "Current Deposit Account"?
Ans. Big institutions, companies, businessman etc. normally open their current deposit accounts.
There are some restrictions on withdrawal in saving accounts and in current accounts there are no
such restrictions.
Current account can be opened with some initial amount decided by the bank. Here the bank
does not pay any interest on their balance, in fact the bank charges the customer certain amount each
year as
Operational Charge. It also provides the facility of withdrawing excess of the balance of
deposit.

Q. 20What is "Overdraft Facility"?

Ans. It is a facility provided by the banks that permits an account holder to use or withdraw more
than they
have in their accounts, but they can't withdraw exceeding the maximum minus balance.This
facility is called Overdraft Facility.
9211825282
Q.21 What is "Fixed Deposit Account"?
Ans. This facility allows us to save money for long time. In saving accounts the rate of interest is
less, but in fixed deposit account the rate of interest is higher. It is also known as term deposit
account. The
depositor can deposit the money for long periods like 7 to 10 years. During this period
withdrawal is not allowed however the depositor can encash the money before the maturity period
but at that time the rate of interest will be less.

Q. 22 What is "Recurring Deposit Account"?

Ans. In this type of account the depositor saves regularly and in return gets a fair return of
deposit.

While opening this account the deposit per month is fixed. We can deposit the amount once in the
month on a fixed date and the amount is also fixed. The total amount with interest we can receive
after the
maturity. The rate of interest in recurring deposit
account is higher than the saving account. The
account can be opened by a person
individually as well as jointly with another.

Q. 23 What are "Non- performing assets" (NPA)?

Ans. The asset which is not producing income is a "Non-Performing Asset". It is an asset or an
account of a borrower which is considered as loss asset or doubtful by the bank account or the
financial institution is called "non-performing asset".

Q. 24 What is 90 days overdue?

Ans. Its a norm for the identification of the "Non-
performing asset" (NPA) starting 31 March 2014.
The norm is as follow:
 Interest or installment of principal remain overdue for more than ninety days in respect of
term loan.
 The account remains out of order for the period of more than ninety days.
- The bill remains overdue for the period of
more than ninety days.
- Any amount to be received is due for more
than ninety days.

Q. 25 What is "Money Laundering"?

Ans. The process of converting illegal money into legal money is Money Laundering. According to
Section 3 of the Prevention of Money laundering Act 2002 as:
"Whosoever directly or indirectly attempts to indulge or knowingly assists or is involved in any
process or activity connected with the proceeds of crime and is projecting it as the untainted property
shall be guilty of the offence of money laundering".

Q. 26 What are the common factors of "Money Laundering"?

Ans. Generally there are four factors of money laundering:
9211825282
 The true ownership and real source of money is not revealed.
 The launderers change the form of the proceeds in order to shrink the huge volume of cash
generated by the initial unlawful activity.
 The trail left by the process is not known so that it make it difficult to follow the money
from the
beginning to end.
 Constant control is maintained on the money.

Q. 27 What are the stages of "Money Laundering" process?

Ans. The following are the stages of "money laundering" process:
1. Placement stage: -It is the first introduction of entry for funds derived for any criminal
activities.
2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of illegal
proceed. It
creates a complex network of transactions which attempts to not reveal the link between the initial
entry and the end of the money laundering cycle.

3. Integration stage: - This process achieves the appearance of total legitimacy of funds
thereby it refers to the return of funds to the legitimate economy for later extraction.

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9211825282
spread the knowledge.
  For ex: - A candidate from Ghazipur, U.P. was asked about cultivation of “Poppy seeds” as Ghazipur is famous for
cultivation of poppy seeds.
 At times, questions about local politics are also put forward like a candidate, from Amethi was asked about the
electoral battle between Rahul Gandhi and Kumar Vishwas form Amethi.
 A good answer to such questions leaves a very positive impact on the board as it demonstrates your awareness about
the surroundings and the fact that you are well prepared puts you ahead of others.

3. Why do you want to join the banking industry?

To answer this question, you can say something like –“I want to join this industry because it can provide me a stable career
with good growth prospects. It is one of the fastest growing sectors of the nation and provides great career opportunities.

There could be many other reasons for you wanting to join the bank industry for e.g. it is an honest organization, good working
conditions, chances to directly interact with public etc. The choice of reason could be anything that suits you as a person.

This is a very commonly asked question and you must be prepared to answer it.

4. Please tell us about your strength and weaknesses.

Here, the answers vary from candidate to candidate. But the strength and weakness should be such that they match up to or
are in synchronization with the personality of the candidate. For ex:- If a candidate says that his strength is is general
awareness while in reality he possesses least knowledge of current affairs - cross questioning can easily unveil him and could
actually land him in trouble.

Some key things to answer this question effectively are:-

 Try to put forward a strength which is useful in the banking sector. For ex: - good communication skills, adjustable etc.
The strength should bring about a positive aspect of your personality in front of the board.
 This is a question from which you can actually turn the interview in your favour. For ex:- If you say something like, “I
have won many awards in debate competitions so I would think that good oratory skills are my strength.”
 This way I can inform the board about my previous achievements also and can get an advantage over others.
 They may ask how your quality/strength will be helpful to bank. Be prepared with an answer.
 Weakness should not be very negative like short temper, irregular etc. as they leave a bad impression.
 Remember, this question is the golden chance for you to turn the ball in your court. In the answer you must introduce
all your unique talent in front of the board. So that the interview enters in your own comfort zone.

5. After doing B.Sc/B,tech/MBA/MA why do you want to choose banking? Why not something related
with you field of education?
You must give honest and sensible answers to such question. For ex:- A MBA candidate may say that there are hardly good jobs
in MBA as of now. Banking is a safe sector providing great employment opportunities. In the answer, you must show your keen
interest in joining banking sector and it should not look like you don’t have an option so you are choosing it.
You can also expect some questions from academics. A science stream student may be asked about about Newton’s Law etc. So,
you must also prepare the subjects studied by you in the degree.

6. What are the basic documents a person requires to open an account?

The RBI has advised banks to follow the Know Your Customer (KYC) guidelines where some personal information of the
account holder is obtained by the bank. This information includes: - photograph, proof of identity and proof of address. In
2013, AADHAR cards and MNREGA cards are included in KYC papers. Without these documents a person can’t open his
account. Key points:-
 The interviewer might ask whether you have a bank account or not.
 It is preferable to have an account and to know about the process because it will only help you if such questions come
up.

7. Who is the governor of RBI?

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As of today (March’14) , you can answer this as, Mr. Raghuram Govind Rajan is the 23rd governor of RBI. Before taking reins as
RBI governor he was an officer on special duty in RBI. He has also served as economic advisor in PMEAC. His tenure is of 3
years ending in September 2016.

Key points:-
 In IBPS interviews, you must have a quick read about the prominent personalities of banking industry, especially
governor and deputy governors of RBI.
 You must address the name of personalities by using Mr. or Madame in case of male and female respectively.
 Try to keep yourself updated about the recent happenings of at least the month prior to interview.

8. Tell us something about the 27th or latest public sector bank in India
Sir, the 27th public sector bank in India is Bhartiya Mahila Bank. It was created by Finance Bill 2012. The first BMB was
opened in Mumbai on 19th November 2013 on the 94th birth anniversary of Indira Gandhi. India is the third country in the
world to have a bank especially for women after Pakistan and Tanzania.
 Tagline- “women empowerment economically”.
 Head- Usha Anantha Subramanayam
 The bank allows deposit from everyone, but lending will be focused for women.
 This bank is very important because it is the latest and 27th PSB of India. So, try to know every basic point about BMB.
 Initial capital of Rs. 1000 crore.

Similarly, if there has been some other initiative in that year, you should be well aware of it.

9. What do you understand by the GDP of the country?

The final value of all the goods and services produced under the geographical area of a country is the Gross Domestic Product
of that country. GDP is calculated at consumption, investment and exports and imports are subtracted from the sum of these
three.

10. What is a Non -banking Financial Company (NBFC)? Difference between NBFC and banks?
A NBFC is a company registered under the companies act, 1956 which is involved in the business of loans, shares/stocks, etc.
Non-banking financial companies are financial institutions that provide banking services, but do not hold a banking license.
These institutions are not allowed to take deposits from the public. NBFCs do offer all sorts of banking services, such as loans
and credit facilities, retirement planning, money markets, underwriting, and merger activities.

The basic difference between bank and NBFC is:-

 They can’t accept demand deposits.
 They are not a part of the payment and settlement system and can’t issue cheques drawn on themselves
 They are not registered in the banking act and don’t have a banking license.
 They don’t have to maintain CRR, SLR or CASA like banks.

12. What is the difference between nationalized banks and private banks?
A nationalized bank is owned by the govt. of that country and is also known as public sector bank whereas a private sector
bank is owned by an independent individual or company.

13. What are the Non Performing assets of a company?

A NPA is an obligation payable to the bank which has not been made or the interest and principal amount has not been paid on
the due time. NPA is the loan or credit provided by the bank to its customers which could not be recovered in due time.

Thus NPA is somehow not yielding any income to the lender either in the form of principal or interest payments. NPA is also
known as “bad debts”.
 NPA is shown at the assets side of the balance sheet whereas deposits are shown at the liability side.
 If there is any recent story or news regarding NPA, then revise it thoroughly. For ex:- Recently, United bank of India
was marred in loss due to its rising NPA. So was the case with Kotak Mahindra Bank.

www.bankersadda.com | www.careerpower.in | www.careeradda.co.in

14. What are the various risks that banks face?
Sir, there are mainly three types of risks faced by banks:-
 Credit Risk: - loan or NPA.
 Market Risk: - Money invested in the market.
 Operational risk: - Day-to-Day working risks.

15. What do you mean by term “CASA” related to bank?

CASA stands for Current Account Savings Account. The CASA ratio shows how much deposit a bank has in the form of current
and saving account deposits in the total deposit. A higher CASA ratio means better operating efficiency of the bank because on
current account there is no interest payable whereas on savings account a tiny 3.5% interest is payable by the bank. CASA
ratio shows how much of the deposit of the bank comes from the current and savings deposit.

16. What is the difference between cheque and demand draft?

Cheque is a negotiable instrument which is paid to the bearer but a demand draft is a negotiable instrument always payable on
order.

17. What are the parts of banks’ capital?

Bank has following parts of capital:-
 Tier 1 capital:- Paid up capital (core capital) + Reserves (owners or promoters’ fund)
 Tier 2 capital:- Secondary Capital (borrowed funds) + general loss reserves + subordinated term debts + undisclosed
reserves (can’t be maintained in India)
 Tier 3 capital: - same as tier 2 capital but with a higher amount in order to face the market risks of the bank.

18. Tell us something about BSBDA.

BSBDA stands for Basic Savings Bank deposit account. BSBDA is the new name for “no-frill accounts” under which anyone can
open a bank account with even zero balance in it or “zero balance account”. This BSBDA is aimed at providing banking facilities
to weaker section of the society and improve financial inclusion. All scheduled commercial banks in India including foreign
banks with branches in India have to avail BSBDA.
Important:-
 Such accounts are opened with “relaxed KYC norms”.
 Relaxed KYC norms include an affidavit by the Pradhaan or councilor of a village or area confirming about the person
concerned.
 In such accounts there are certain restrictions- in a month, 4 withdrawls can be done at a maximum. This includes
ATM withdrawls. The amount withdrawn in a month shouldn’t exceed Rs. 10,000 and the balance in the account at
anytime shouldn’t exceed Rs. 50,000.

19. What is the meaning of “base rate”?

Base Rate is the minimum rate of interest which a bank has to charge from its customers and a bank can’t sanction loan on a
rate below the base rate. This rate came into effect from July 1 2010. Before Base rate there was Basic Prime Lending Rate or
BPLR introduced in 2003. It was replaced with Base Rate because in BPLR banks had an option to loan their special customers
below BPLR. Banks may choose any benchmark to decide on the base rate. The exceptions of base rate are:-
 Agriculture loans
 Govt. sponsored schemes
 Staff loans
Only under the above cases, bank can lend below base rate.

20. We hear regularly that all bank branches are turning CBS. What is CBS?
Sir, CBS stands for CORE banking solutions under which the branches of the banks are interconnected with each other through
intra net with a central database server. Now, with this facility, a person having an account in a certain branch of the bank can
operate from any other branch of the same bank. He need not visit the same branch to operate his account. The CORE word in
CBS stands for Centralized Online Realtime Exchange.

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21. What is Para Banking?
Para Banking includes all the services provided by banks apart from day to day banking. For example: - Debit cards, Credit
cards, Life Insurance products, Cash Management services etc.

22. What are the components of the monetary policy of RBI?

The components of monetary policy include CRR, Repo rate, reverse repo rate, SLR, MSF and Bank Rate.

23. What is priority sector credit?

All Indian banks and foreign banks (which have more than 20 branches in India) are required give 40% of their credit to
priority sector out of which 18% is for agriculture. In case of Regional Rural Banks, 60% credit is to be given to priority sector.
Priority sector includes- Agriculture, Micro and small enterprise, Education loan (upto 10 lakh for study in India and upto 20
lakhs for study in foreign nations) and housing loan. Priority sector lending is one of the most important part of a bank’s
lending and it is devoted towards those sector which are important for public welfare.

24. What is the difference between Micro finance and micro credit?
Micro credit is giving a small amount of loan to the customers whereas Micro Finance is a wide term. It includes small loan +
training on financial matters. In other words, Micro finance= Microcredit + Financial Literacy.

25. What is financial inclusion? (One of the most important questions).

Financial inclusion is the availability of banking services at a affordable cost in order to include the weaker section of the
society in the banking system. In 2004, Kofi Annan (UNO Head) was addressing UNESCO conference and the word “Financial
Inclusion” was for the first time used by him at that time. In 2006, a committee was made under the chairmanship of Mr. HR
Khan for financial inclusion and the report said that 57% of Indian population was deprived of banking facilities.

26. What are the steps taken by banks to promote financial inclusion?
 Publicity of banks so that more and more people open the accounts.
 BSBDA so that poor people can also open their account.
 People with agriculture land are being provided with Kisan Credit Card.
 General Purpose Credit card provided to people with no agricultural land where maximum limit of withdrawal is
Rs.15,000 and rate of interest is 4%.
 Ultra small banking and banking correspondents.
 CRISIL has made an index to calculate financial inclusion named as “CRISIL INCLUSIX” and in June 2013, there was
40% financial inclusion as per the index.

27. What is REPO rate and reverse REPO rate?

Repo rate is the rate at which banks borrow from RBI during shortage of funds. This is a short term loan provided for upto 90
days by selling securities to RBI and receiving money in lieu of it. Reverse repo rate is the rate at which banks deposit their
excess liquidity with the RBI. In other words, the rate at which RBI borrows from banks by selling securities in order to control
excess liquidity in the market is reverse repo rate.

Liquidity Adjustment Facility (LAF) introduced in 2000 has a provision that reverse repo rate will be 1% less than the Repo
rate.

28. What is Bank rate?

It is same as repo rate but here the time period is for more than 90 days.

29. What is Cash Reserve Ratio (CRR)?

CRR is the part of Net Demand and Time Liabilities (NDTL) or cash of the bank deposited with the RBI. A higher CRR makes
loans expensive as liquidity is controlled by RBI. NDTL is the deposits of the customers with the bank. Net demand liabilities
are deposits payable on the demand on customer, or when the customer wants. Ex:-current account, savings account. Time

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liabilities are the deposits which are payable only on a specific time or after a period of maturity. For ex:- Fixed deposits,
Recurring Deposits.

30. What is Statutory Liquidity Ratio (SLR)?

SLR is the amount of NDTL which a bank needs to maintain in the form of cash, gold or govt. securities before providing credit
to its customers. Through SLR, RBI makes sure that bank always have a reserve amount out of their deposits to meet any
future contingencies.

31. What is Marginal Standing facility (MSF)?

In MSF, banks borrow money from RBI for upto 24 hours. MSF is always 1% above the repo rate and banks can draw only upto
25 of their NDTL from RBI.

32. What is Term Repo?

Under term repo, RBI lends to banks through auction of funds. The minimum interest charged has to be above the repo rate
and there is no limit for maximum interest rate because auction is made on the rate of interest.

33. What is white label ATM?

It refers to ATMs owned by corporate or private operators seeking to earn a commission by banks for transactions performed
by their customers. For ex:- INDICASH by TATA group.

34. What is brown label ATM?

It refers to the ATMs where investment, installation and maintenance is by a private operator but the license and branding is
by a commercial bank.

35. Tell us something about NABARD and its functions.

NABARD was established by an act of Parliament on 12 July 1976 as National Bank for Agricultural and Rural Development. It
is the apex bank to provide rural credit and monitor the RRBs. The main functions of NABARD are:-
 Provide refinance to RRBs and other banks in rural areas for lending.
 Acts as a subsidiary for RRBs and co-operative banks.
 It has two subsidiaries:-
 NABFINS:- NABARD financial
 NABCON: - NABARD consultancy.

36. What is banking ombudsman scheme?

The banking ombudsman scheme is a scheme to listen to customer’s grievances and complaints regarding certain services
provided by the bank. It was introduced under the Section 35 A of banking regulation act, 1949 by RBI with effect from 1995
which was later amended and became the banking ombudsman scheme, 2006. Customer can appeal against the decision of
ombudsman to deputy governor of RBI. He is the highest authority of appeal. All banks in India are covered under the scheme.

37. What is the difference between FII and FDI?

FDI or foreign direct investment is an investment that a parent company makes in a foreign country. FII or Foreign
Institutional Investor is an investment made by an investor in the markets of a foreign nation. FII can enter the stock market
easily and also withdraw from it easily. But FDI cannot enter and exit that easily as FDI only targets a specific sector.

38. What is the CAD? What is Fiscal deficit?

CAD or current account deficit is the difference between the imports and exports of a nation in one financial year whereas
fiscal deficit is the difference between total revenue and expenditure of a nation.

39. What is inflation and deflation?

Inflation is the increase in the price of goods and services due to more demand and less supply. In inflation, there is more
liquidity in market which has to be controlled to reduce the purchasing power of customers. Deflation is the decrease in prices

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of goods and services due to more supply and very less demand. In deflation, there is lack of liquidity in market which results
in very weak purchasing power of people.

40. What is Capital Adequacy Ratio? What is DEMAT account?

CAR is the proportion of capital to the banks’ risk. DEMAT accounts are those in which shares, securities and insurance policies
are kept in electronic form.

41. Name a few poverty eradication schemes of govt. of India.

Food Security bill, MNREGA, Sarva Shiksha Abhiyaan, Antoday Yojana, JNURRM, Swalamban Yojana, Nirmal Gram Yojana, Rajiv
Awas Yojana, Indira Gandhi Pension plan etc. (Also read in detail about these schemes.)Apart from the questions listed above,
the candidate needs to thoroughly read about the latest happenings at the time of his interview. He must read the newspaper
of the very day of his interview because there have been many instances where the board asks the news of that day.

He needs to prepare a full note about RBI, and types of banks, functions of RBI, and the latest monetary policy given by RBI etc.
and many other banking terms and facts, insurance facilities provided by banks, important bills like food security bill, RTI etc.

Public finance and budget process Questions Asked in Interviews

Q1. What is budget?

Ans. The ‘Budget System’ in India was first introduced on 7th April 1860 by James Wilson, the first Indian Finance Member.
The budget is the ‘Statement’ of the estimated receipts and expenditure of Government for that year. This ‘Statement’ is called
the “Annual Financial Statement”.

Q2. What points are covered in the “Annual Financial Statement”?

Ans. The “Annual Financial Statement” consists of:
 Statements of expenditure.
 Ways and means to raise the revenues.
 An analysis of the actual receipts and expenditure of the closing year.
 The causes of any surplus or deficit in relation to such year.
 An explanation of the economic policy.
 Spending program of the government for the coming year.
 Prospects of revenue.

Q3. How is the “Budget” processed?

Ans. In our parliament two budgets are presented.
1. Railway budget
2. General budget

Both budgets are presented in Lok Sabha. The Railway Budget is presented by the ‘Minister of Railway’ and the General

Budget is presented by the ‘Finance Minister’. The Budget speech is represented in two parts:
 PART A –“General Economic Survey” and
 PART B –“taxation proposals”.

One copy of the budget is presented in Rajya Sabha also. After few days the discussion starts on the presented Budget.

Budget was discussed in two stages:

 General discussion followed by detailed discussion and
 Voting on demands for grant.

After receiving ‘demands for grants’ and detailed discussion by the different ministries the budget is processed.

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Q3. What is “Consolidated Fund”?
Ans. It is the most important of all government funds. All government expenditures are made from this fund except the items
met from ‘Contingency fund’ and ‘Public Account Fund’. No money can be withdrawn from this fund without Parliament’s
approval.

Q4. What is “Contingency Fund”?

Ans. Any urgent expenditure is met from this fund. Rupees 500 crore fund is at the disposal of the president. If any unforeseen
expenditure is incurred from this fund requires approval from the parliament and amount withdrawn is returned to the fund
from consolidated fund.

Q5. What is “Fiscal Deficit”?

Ans. It refers to the excess of all expenditures, which includes the capital and revenue plus net lending over total revenue
receipts and external grants. This explains the total expenditure and borrowing by the government.

Banking structure questions

Q1. What is a bank?

Ans. Bank is a financial institute where we deposit the money. The bank accepts this money for the purpose of lending and
repays it on demand.

Q2.What is the major functions of any bank?

Ans. Major Functions of bank are:-
 Accepting deposits from public or firm.
 Lending money to public.
 Transferring money from one place to another.
 Credit creation.
 Act as trustee.
 Keep valuables in safe custody.

Q3. In how many types you may categorize the bank in

India?
Ans. We can categorize the banks into five categories :
 Central bank (RBI)
 Public sector banks
 Private sector banks
 Co-operative sector banks
 Development bank or financial institution

Q4. What are scheduled commercial banks?

Ans. Scheduled commercial banks are those banks in India which
were included in the second schedule of Reserve Bank of India (RBI)
Act, 1934.

Q5. In which year national housing bank (NHB) started

its operation?
Ans. NATIONAL HOUSING BANK (NHB) started its operations in
1988.

Q6. Under which act were the State Bank of India and its
subsidiaries nationalised?
Ans. The State Bank of India and its subsidiaries where nationalized

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under SBI Act, 1955.

Q7. What is non-scheduled bank?

Ans. Non –scheduled bank in India means a banking company as defined in clause (C) of section 5 of the BANKING
REGULATION Act, 1949.

Q8. What are Co-operative banks?

Ans. Co-operative banks are organised under the provision of co-operative credit society’s law of state. The major beneficiary
of this bank is agricultural sector.

Q9. Which is the first bank that was incorporated at the initiative of World Bank and in which year?
Ans. The Industrial Credit and Investment Corporation of India Limited (ICICI) in the year 1955.

Q10. How may development banks are there in India and name them?
Ans. There are six development banks are there in India. They are:
 ICICI
 IDBI
 SIDBI
 EXIM BANK
 NHB
 NABARD

Q11. In which year Indian Banks Association (IBA) was formed and initially with how many members?
Ans. IBA was formed in 26 September, 1946 with 22 members.

Q12. What is KYC?

Ans. KYC is the acronym for “know your customer”, which is termed for the process of proper identification of account holder.

Q13. What is CRAR?

Ans. The Reserve Bank of India had made a norm that every bank has to maintain an adequate amount of capital on continuous
basis and this adequacy of capital is measured in terms of CAPITAL TO RISK-WEIGHTED ASSEST RATIO which is also known
as CRAR.

Q14. What is the minimum amount of money that should be remitted through RTGS?
Ans. We can remit Rs 2,00,000/- minimum through RTGS.

Q15. Who insures the banks in India?

Ans. Deposit Insurance and Credit Guarantee Corporation (DICGC) insure the banks in India.

Q16. Which was the first Indian bank to get an ISO certification?
Ans. CANARA bank was first Indian bank that got an ISO certification.

Q17. Name the financial institution built by Industrial Development Bank of India (IDBI)?
Ans. The financial institutions built by IDBI are:-
 NATIONAL STOCK EXCHANGE OF INDIA (NSE)
 THE NATIONAL SECURITIES DEPOSITORY SERVICE LIMITED (NSDL)
 STOCK HOLDING CORPORATION OF INDIA (SHCIL)

Q18. According to Narasimham committee what is the minimum amount of money that is statutorily
required by the NBFC’s for registration?
Ans. According to Narasimham committee NBFC’s require Rs.25,00,000 for registration.

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Q19. Which committee had worked for the recapitalisation of Regional Rural Banks (RRB’s)?
Ans. K.C. CHAKARABARTY worked for the recapitalisation of RRB’s.

Q20. The authorized capital of NABARD in 2013 was raised up to what limit?
Ans. In the year 2013 the authorized capital of NABARD raised up to 20000 corers.

Q21. The BASEL COMMITEE was formed in which year?

Ans. The BASEL COMITTEE was formed at the end 1974.

Q22. Which bank comes under the category of APEX banks.

Ans. Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD) come under the
category of APEX banks.

Q23. Which kind of operations are included in treasury operations?

Ans. The treasury operations include the following:-
 DEBT MARKET
 EQUITY MARKET
 MUTUAL FUNDS
 DERIVATIVES
 FOREX OPERATIONS
 TRADING

Q24. What do you mean by CASH CREDIT?

Ans. CASH CREDIT is the system formed by the banks which allows
the borrower to draw amount up to the specified limit.

Q25. What do you understand by OVERDRAFT?

Ans. OVERDRAFT is the facility granted by bank to the customers of
current account by which they draw the amount more than the credit
balance in their account.

Q26. How many types of debit card do the banks provide

to their customers in India?
Ans. The following are the types of debit cards provided by the banks
in India are:-
 VISA CARD
 MAESTRO CARD
 MASTERCARD
 RUPAY CARD

Q27. How many type of deposits does Indian banking

deal with?
Ans. The Indian banking industries deal with the following types of
deposits:-
 Term deposits
 Demand deposits
 Current deposits
 Savings deposits

Q28. Classify the business of banking?

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Ans. Business of banking can be classified into four categories:-
 Retail banking business
 Wholesale banking business
 Treasury operations
 Other banking activities

Q29. What are the major products of the banking

industry?
Ans. There are three major products in the banking industry:
 Deposit products
 Credit products
 Customized banking services

Q30. Which Act allows the bank and financial institutions to auction the properties when borrower
fails to repay the loans?
Ans. SARFAESI Act, 2002 allows the banks and financial institutions to auction the properties when borrowers fail to repay
their loans.

The acronym for SARFAESI is “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest”.

Q31. What is the significance of IFSC code?

Ans. The acronym for IFSC is “Indian Financial System Code”. It is an alpha numeric 11 digit codes which uniquely identifies a
particular bank branch in India.

Q32. What are the objectives of SLR?

Ans. Objectives of SLR:
 To restrict expansion of banks credit.
 To increase banks investment in approved securities.
 To ensure solvency of banks.

Q33. How many types of subsidiaries does RBI have?

Ans. RBI has two types’ subsidiaries
 Fully owned subsidiary
 Majority stack subsidiary

Q34. Name the fully owned subsidiaries of RBI?

Ans. RBI has three fully own subsidiaries:
 National Housing Bank(NHB)
 Deposit Insurance and Credit Guarantee Corporation of India(DICGC)
 Bharatiya Reserve Bank Note Mudran Pvt. Ltd.(BRBNMPL)

Q35. Name some negotiable instruments.

Ans. The negotiable instruments include
 promissory note
 bill of lading
 Bank draft/ pay order/bankers cheque.
 Railway receipts
 Dock warrant
 Warehouse receipt
 Certificate of deposit
 Commercial paper

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  Treasury bills
 Hundi

Q36. What are the features of Negotiability?

Ans. Features of Negotiability:
 Freely transferable by delivery (when it is bearer).
 Freely transferable by endorsement (when it is an order
instrument).
 The transferee taking the instrument in good faith.

Q37. What is Promissory Note (PN)?

Ans. It’s an instrument in writing which contains an unconditional undertaking signed by the maker to pay a certain sum of
money to the order or the bearer of instrument. The Promissory Notes require being stamped ad per Indian Stamp Act.

Q38. How many types of Promissory Notes are there?

Ans. Types of Promissory Note:
 Demand Promissory Note - The Promissory Note which is payable immediately on demand is called “Demand
Promissory Note”.
 Usance Promissory Note - The Promissory Note which is payable after a predefined definite period is called “Usance
Promissory Note”.

Q39. How many parties are required in Promissory Notes?

Ans. Basically it requires two parties. The one is maker who promises to pay and the other is payee to whom it is payable.
For example a person take loan from the bank then the “person” is the “maker” and “the bank” is “payee”.

Q40. What is “Money Laundering”?

Ans. The process of converting illegal money into legal money is Money Laundering. According to Section 3 of the Prevention
of Money laundering Act 2002 as: “Whosoever directly or indirectly attempts to indulge or knowingly assists or is involved in
any process or activity connected with the proceeds of crime and is projecting it as the untainted property shall be guilty of the
offence of money laundering”.

Q41. What are the common factors of “Money Laundering”?

Ans. Generally there are four factors of money laundering:
 The true ownership and real source of money is not revealed.
 The launderers change the form of the proceeds in order to shrink the huge volume of cash generated by the initial
unlawful activity.
 The trail left by the process is not known so that it make it difficult to follow the money from the beginning to end.
 Constant control is maintained on the money.

Q42. What are the stages of “Money Laundering” process?

Ans. The following are the stages of “money laundering” process:
1. Placement stage:-It is the first introduction of entry for funds derived for any criminal activities.
2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of illegal proceed. It creates a complex network
of transactions which attempts to not reveal the link between the initial entry and the end of the money laundering cycle.
3. Integration stage: - This process achieves the appearance of total legitimacy of funds thereby it refers to the return of funds
to the legitimate economy for later extraction.

Q43. Give few ways of “Money Laundering”?

Ans. Following are the few ways of money laundering:-
 Frequent exchange of cash into other currencies.
 Large withdrawals from inactive account.
 Transferring large sum of money to or from abroad.

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  More use of safe deposit facilities.
 Customer having several accounts in different banks but in same location.

Q44. What is “Digital Signatures” (DS)?

Ans. Digital Signature is used for security purpose and it is equivalent to the handwritten signature. It is a signature in
electronic form attached to an electronic record. Digital signature identifies the origin of the message and maintain the
integrity of message. It defines authentication of an electronic record by a person whose name the digital signature certificates.
In India Information Technology Act 2000 considers digital signature as personalized thumb print.

Q45. What is “Mobile Banking”?

Ans. Mobile banking provides us the ease of carrying out certain banking transactions through their mobile phone. This facility
is provided by the banks. Many operations can be performed by using mobile banking like checking account balance, other
account etc

Q46. What is “Electronic Fund Transfer System” (EFTS)?

Ans. Electronic fund transfer provides us to transfer fund electronically replacing the paper instruments. The electronic fund
transfer is fast and easily available. It saves time of customer’s standing in queue. The products of EFTS includes:-
 WTs- wireless transfers.
 ATM- Automated Trailer Machine
 CDs- Cash Dispensers
 POS- Point of Sale terminals
 Home banking

Q47. What is “Smart Card”?

Ans. The Smart Card is an Integrated Circuit Card (ICC) to store
information. It is a cash card or we can say ‘electronic purse’ which is
a pre-paid cash card. The card provides an option to the customers
for debit and credit facilities. These cards can be reloaded by ATM or
by telephone. It reduces the need of carrying cash for shopping and
enables the card holder to increase the amount at any time.

Q48. What is “Credit Card”?

Ans. It is an instrument of payment. The customer gets some credit on
the card which he can use for shopping, ticket booking, encashment
etc. The credit cards are of different types having different credit
limits depending upon the bank.

Q49. What is “Debit Card”?

Ans. It is a payment card used to obtain cash, purchasing goods and
services automatically debiting the payment to the card holder’s bank
account.

Q50. What are the advantages of “Debit Card”?

Ans. The advantages of Debit Card:
 No need to carry cash.
 Quick and less complicated than using cheque.
 Used for withdrawal of cash.
 It can be issued to any individual having bank account

Q51. What is Inflation?

Ans. The rise in the prices of goods or service in an economy over a
certain period of time is known as inflation.

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Q52. Name the types of “Inflation”?
Ans. Following are the types of inflation:-
 Wage inflation
 Price power inflation
 Cost-push inflation
 Sectorial inflation
 Stagflation
 Mild inflation
 Hyper-inflation

Q53. What are the effects of “Inflation”?

Ans. Following are the effect of inflation:-
 It decreases the real value of money
 It discourage investment and savings
 It leads to shortage of goods
 Mitigate economic recessions
 Reduces the level of debt
Q54.What is PAN number and where we can use PAN number?
Ans. A PAN is a 10 character alphanumeric number allotted to a tax payer who is eligible to file the income tax return. The PAN
number is used for the following financial transactions:
 Sale or purchase of any immovable property valued 5 lac or more.
 Sales or purchase of Motor Vehicle or Vehicle.
 One time deposit exceeding Rs. 50000 with banking company.
 A contract of value exceeding Rs. 10 lac for sale or purchase of securities.
 Opening an account with a banking company.

Types of Bank Accounts in India (Deposit Accounts)

Traditionally banks in India have four types of deposit accounts, namely Saving Banking Accounts, Current Accounts,
Recurring Deposits and, Fixed Deposits.

1. Saving Account - Saving accounts are opened to encourage the people to save money and collect their savings. The saving
account holder is allowed to withdraw money from the account as and when required. The interest on Saving Bank
Accounts was fixed by RBI and it was fixed at 4.00% on daily balance basis. RBI has deregulated Saving Fund account
interest rates and now banks are free to decide the same within certain conditions imposed by RBI.
Features of Saving Accounts –
 There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account
Number) details are required to be furnished for doing cash transactions exceeding र50,000.
 Withdrawals are allowed subject to certain restrictions.
 A minimum amount has to be kept on saving account to keep it functioning.

2. Current Account - Current Accounts are basically meant for businessmen and are never used for the purpose of investment
or savings.
Features of Current Accounts –
 The main objective of Current Account holders in opening these account is to enable them (mostly businessmen) to
conduct their business transactions smoothly.
 There are no restrictions on the number of times deposit in cash / cheque can be made or the amount of such
deposits;

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  Usually banks do not pay any interest on such current accounts.
 The current accounts do not have any fixed maturity as these are on continuous basis accounts.
 Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name
or endorsed in their favour by third parties.

3. Recurring Desposit Account: Recurring Deposit is a special kind of Term Deposit offered by banks in India popularly
known as RD accounts 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.
Features of RD Accounts –
 Recurring Deposit accounts are normally allowed for maturities ranging from 6 months to 120 months
 These accounts can be opened in single or joint names. Nomination facility is also available.
 Rate of Interest offered is similar to that in Fixed Deposits.
 Interest is compounded on quarterly basis in recurring deposits.

4. Fixed Deposit Account (FD) - The account which is opened for a particular fixed period (time) by depositing particular
amount (money) is known as Fixed (Term) Deposit Account. The term 'fixed deposit' means that the deposit is fixed and is
repayable only after a specific period is over. Under fixed deposit account, money is deposited for a fixed period say six
months, one year, five years or even ten years. The money deposited in this account can not be withdrawn before the expiry of
period.
Features of FD Accounts –
 The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their
surplus funds (extra money).
 The amount can be deposited only once. For further such deposits, separate accounts need to be opened.
 Fixed Deposit Account may be opened for a minimum period of 7 days and maximum period of 10 years.
 The minimum amount required to open a Fixed Deposit is Rs.1000.
 Withdrawals are not allowed. However, in case of emergency, banks allow to close the fixed account prior to maturity
date. In such cases, the bank deducts 1% (deduction percentage many vary) from the interest payable as on that date.

5. About (BASIC SAVING BANK DEPOSIT ACCOUNT): 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".
ii. The aim of introducing 'Basic Savings Bank Deposit Account' is very much part of the efforts of RBI for furthering Financial
Inclusion objectives.

Main Points of BSBDA-Small Accounts:

In BSBDA, banks are required to provide free of charge minimum 4 withdrawals, through ATMs
Total credits in such accounts should not exceed 1 lakh rupees in a year.
Maximum balance in the account should not exceed 50,000 Rs at any time
The total of debits by way of cash withdrawals and transfers will not exceed 10,000 rupees in a month
Foreign remittances cannot be credited to Small Accounts without completing normal KYC formalities
Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person
provides proof of having applied for an Officially Valid Document.

6. ATMs: (Automated Teller Machine): The ATM debit cards, credit cards and prepaid cards (that permit cash withdrawal)
issued by banks can be used at ATMs for various transactions.

Use of ATMs of Other Banks:

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5 free transactions are permitted per month (inclusive of financial and/or non-financial) at other bank ATMs for Savings
Bank Account holders.
For transaction beyond this minimum number of transactions, banks charge maximum of Rs 20/ - per transaction.
Reserve Bank of India reduced free usage of other bank automated teller machines (ATMs) to 3 per month from 5 from
November, in six metropolitan cities - Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.

Reconciliation of failed transactions at ATMs

The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to 7
working days from the date of receipt of customer complaint.
Accordingly, failure to recredit the customer’s account within 7 working days of receipt of the complaint shall entail payment
of compensation to the customer @ Rs. 100/- per day by the issuing bank..
Any customer is entitled to receive such compensation for delay, only if a claim is lodged with the issuing bank within 30 days
of the date of the transaction.
All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM
system provider only.

WHITE Label ATMs: ATMs which are owned and operated by non-banking companies are called White Label ATMs.
Note: RBI authorised four entities to operate as WLAs namely Tata Communications Payment Solutions, Prizm Payment
Services Pvt. Ltd, Muthoot Finance Limited and Vakrangee Ltd.

Personal Identification Number (PIN) : A Personal Identification Number is a secret numeric password shared between user
and a system that can be use to authenticate the user to the system.

IFSC (Indian Financial System Code):

Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT
system.
ii. 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.
iii. 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.
For ex: SBIN0015986 : i. First 4 character SBIN – refers to State Bank of India. ii. 0 is a control number.
iii. last six characters (015986) represents the SBI branch Jail Road, Hari Nagar New Delhi.

MICR (Magnetic Ink Character Recognition): MICR stands for Magnetic Ink Character Recognition. MICR Code is a 9
numeric digit code which uniquely identifies a bank branch participating in the ECS Credit scheme. MICR code consists of 9
digits e.g 400229128
i. First 3 digits represent the city (400) ii. Next 3 digits represent the bank (229)
iii. Last 3 digits represent the branch (128)
Note: The MICR Code allotted to a bank branch is printed on the MICR band of cheque leaves issued by bank branches.

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.

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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.

Banking Ombudsman Scheme 2006:

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks.
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against
deficiency in certain banking services.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the
Scheme.
Other Important Points:
 The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.
 The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the
complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 10 lakhs, whichever is
lower.
 The Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of
complaints relating to credit card operations for mental agony and harassment.
 If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to
pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant
and the bank, to present their case.
 If one is not satisfied with the decision passed by the Banking
Ombudsman, one can approach the appellate authority against
the Banking Ombudsmen’s decision. 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.

Deposit insurance and credit guarantee corporation (DICGC)

All commercial banks including branches of foreign banks functioning

in India, local area banks and regional rural banks are insured by the
DICGC. Note: Primary cooperative societies are not insured by the
DICGC.

DICGC insure: DICGC protects bank deposits that are payable in

India.
The DICGC insures all deposits such as savings, fixed, current,
recurring, etc. except the following types of deposits.
(i) Deposits of foreign Governments;
(ii) Deposits of Central/State Governments;
(iii)Inter-bank deposits;
(iv) Deposits of the State Land Development Banks with the State co-
operative bank;
(v) Any amount due on account of any deposit received outside India

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(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of
India.

Maximum deposit amount insured by the DICGC - Each depositor in a bank is insured upto a maximum of Rs.1,00,000
(Rupees One Lakh).

Credit Information Bureau (India) Limited: is India’s first Credit Information Company (CIC) founded in August 2000.
CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards.
Headquarter – Mumbai
Coins in India

Coins: The Government of India has the sole right to mint coins. The designing and minting of coins in various
denominations is also the responsibility of the Government of India. Coins are minted at the four India Government Mints at
Mumbai, Alipore (Kolkata), Saifabad (Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP).

Denominations: Coins in India are presently being issued in denominations of one rupee, two rupees, five rupees and ten
rupees. Note: Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906.

Currency in India
Currency: Banknotes in India are currently being issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs500,
and Rs1000. These notes are called banknotes as they are issued by the Reserve Bank of India (Reserve Bank).
Note: The printing of notes in the denominations of Rs 1, Rs 2 and Rs 5 has been discontinued as these denominations have
been coinised.
Bank Notes in India
Contemporary Currency notes have 15 languages on the panel which appear on the reverse of the note.

Soiled Notes: Soiled notes are those which have become dirty and slightly cut. Notes which have numbers on two ends, i.e.
notes in the denomination of Rs.10 and above which are in two pieces, are also treated as soiled note. The cut in such notes,
should, however, not have passed through the number panels.

Mutilated Notes: Notes which are in pieces and/or of which the essential portions are missing can also be exchanged.
Essential portions in a currency note are name of issuing authority, guarantee, promise clause, signature, Ashoka Pillar
emblem/portrait of Mahatma Gandhi, water mark.

Imperfect banknotes: Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed,
altered or indecipherable but does not include a mutilated banknote.

Security Features of Indian Banknotes

Watermark Security Thread Latent Image Micro lettering
Intaglio Identification Mark Fluorescence Optically Variable Ink
See through Register Legal provisions against counterfeiting

Some Important Tips which you have to keep in your mind while going for Interview.

1. Tips on Preparing for the Interview-Day:

i. Gather information about the bank or organization that has invited you for the interview. This will give you a clear idea
about the philosophy, work environment and reputation of the company.

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ii. Read the job description carefully as to what they expect from you.
iii. Evaluate your qualifications, experience, and core competences, areas of strength and accordingly draw up a questionnaire
along with your replies to the expected questions.

2. Brush up your communication skills.

i. Interviewers normally ask you to highlight your strengths and weaknesses.
ii. Strengths of course can be emphasized more easily but even the weaknesses can be presented in a positive light. For
example, ‘I am a little impatient with the people who are not focused enough, or non serious about the work in hand’
iii. Go with a positive frame of mind, without worrying much about the outcome.

3. Attending the Interview: Go with a smile (not a grin) on your face, with confidence and determination to succeed in your
heart.

4. As You Enter:
i. Depending upon whether you are being interviewed by one person or a panel of interviewers, greet politely ‘Good
Morning’/Afternoon or Evening depending upon time of the day.
ii. If there are more than one person then address them as ‘Sirs/Madams’ and try to encompass them all in your greeting. If
there is only one lady in the panel, it is polite to greet her separately.
iii. Most probably you will be offered a seat. Do not sit down unless
you are asked to.

5. Facing the Interviewers

i. As you sit across the interviewer(s), look confident and relaxed.
ii. In most cases the interviewers themselves will try to put you at
ease.

6. The Body Language

i. Good body language can be inculcated and practiced. Your facial expression, appearance, gestures, how you walk, talk, stand,
sit, use your limbs etc. all form part of your body language.

7. Pay attention to the following.

 Sit straight comfortably without craning your neck. Do not slouch.
 Look attentive, keen and interested.
 Talk clearly, maintaining a pitch that is comfortably audible to the person(s) around.
 Do not get overexcited even while describing your achievements and strengths.
 Listen to the queries attentively, constantly maintaining polite eye contact with the interviewers.
 Nod your head to show that you are listening, interjecting appropriately with ‘Yes Sir/Madam’, absolutely, definitely etc.
 Lean forward a little as you speak and backward as you listen.
 Do not touch your face, or shake your legs.
 Keep your arms either on your sides or in your lap. Do not fold your arms, as it is a sign of rudeness.
 Use short simple sentences while talking.
 Do not make unrealistic tall claims during the interview.
 Never get too arrogant or aggressive in front of the interviewers.
 Do not show your disappointment and disinterest. Maintain your poise till the end.
 Always thank the interviewers as you leave.

All the best from BA Family

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1. Why do you want to join banking sector?
Banking is one of the fastest growing sectors in India with more stable and high
growth and more over providing wide range of career opportunities for graduates.
So I want to take an opportunity to join in a bank.

2. What is the difference between Cheque and Demand Draft?

Cheque: Cheuqe is a negotiable instrument instructing a bank to pay a
specific amount from a specific account held in the maker/depositor name
with that Bank.

Demand Draft: A demand draft is an instrument used for effecting transfer of

money. It is a negotiable instrument.

3. What is a Non-Banking Financial Company (NBFC)?

A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition
of shares/stocks/bonds/debentures/securities issued by Government or local
authority or other marketable securities of a like nature, leasing, hire-purchase,
insurance business, chit business but does not include any institution whose
principal business is that of agriculture activity, industrial activity, purchase or sale
of any goods (other than securities) or providing any services and
sale/purchase/construction of immovable property. A non-banking institution
which is a company and has principal business of receiving deposits under any
scheme or arrangement in one lump sum or in installments by way of contributions
or in any other manner, is also a non-banking financial company (Residuary non-
banking company).

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4. NBFCs are doing functions similar to banks. What is difference between
banks & NBFCs ?

NBFCs lend and make investments and hence their activities are akin to that of
banks; however there are a few differences as given below:
 NBFC cannot accept demand deposits;
 NBFCs do not form part of the payment and settlement system and cannot
issue cheques drawn on itself;
 deposit insurance facility of Deposit Insurance and Credit Guarantee
Corporation is not available to depositors of NBFCs, unlike in case of banks.

5 . What is Private Banking?

Banking services offered to high net-worth individuals. Private banking institution
assists the high net-worth individual in investing his/her money in exchange for
commissions and fees. The term "private" refers to the customer service being
rendered on a more personal basis.

6. What is BSBDA?
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.

7. What is BPS (Basis Points)?

BPS (Basis point) : - BPS is an acronym for basic points is used to indicate
changes in rate of interest and other financial instrument.
1 BASIC POINT IS EQUAL TO 0.01%
So when we say that repo rate has been increased by 25 bps, it means that
the rate has been increased by 0.25%

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8. What is KYC?
The Reserve Bank of India (RBI) has advised banks to follow „KYC
guidelines‟, wherein certain personal information of the account-opening
prospect or the customer is obtained. The objective of doing so is to enable the
Bank to have positive identification of its customers. This is also in the
interest of customers to safeguard their hard earned money.
The KYC guidelines of RBI mandate banks to collect three proofs from their
customers. They are-
 Photograph
 Proof of identity
 Proof of address

9. What is Sub-prime crisis?

The current Subprime crisis is due to sub-prime lending. These are the loans given
to the people having low credit rating.
10. What is Base Rate?
It is the minimum rate of interest that a bank is allowed to charge from its
customers. Unless mandated by the government, RBI rule stipulates that no
bank can offer loans at a rate lower than BR to any of its customers.
It is effective from, July 1, 2010. However, all existing loans, including home
loans and car loans, will continue to be at the current rate. Only the new loans
taken on or after July 1 and old loans being renewed after this date will be
linked to BR.

11. What is SWIFT?

SWIFT :- Society for worldwide Interbank financial tele- communication.
 India was 74th Nation to join SWIFT Network.
 SWIFT Code is a standard format of bank Identifier code. This code is used
particularly in International transfer of money between banks.

 A majority of FOREX related message are sent to correspondent banks

abroad through SWIFT.

 SWIFT Code consist 8 or 11 character when code is 8 digit, It is referred to

primary office 4 – bank code
2 – country code
2 – location code
3 – branch code (optional).

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 12. What is Swabhimaan Yojana?
Swabhimaan is a financial inclusion plan of bank to take banking to the door steps
of the remote village where banking facility are not available.

13. What is NOSTRO and VOSTRO account?

NOSTRO Account: A NOSTRO account is maintained by an Indian bank in the
foreign countries.

VOSTRO Account: a vostro a/c is maintained by a foreign bank in India with

their corresponding bank.

14. What is a DeMat Account?

DeMat is nothing but a dematerialized account. If one has to save money or make
cheque payments, then he/she needs to open a bank account. Similarly, one needs
to open a DeMat account if he/she wants to buy or sell stocks. Thus, DeMat
account is similar to a bank account wherein the actual money is being replaced by
shares. In order to open a DeMat account, one needs to approach the Depository
Participants [DPs].
In India, a DeMat account is a type of banking account that dematerializes paper-
based physical stock shares. The DeMat account is used to avoid holding of
physical shares: the shares are bought as well as sold through a stock broker. In
this case, the advantage is that one does not need any physical evidence for
possessing these shares. All the things are taken care of by the DPs.
This account is very popular in India. Physically only 500 shares can be traded as
per the provision given by SEBI. From April 2006, it has become mandatory for
any person holding a DeMat account to possess a Permanent Account Number
(PAN).

15. What is RuPay Card?

RuPay is the Indian domestic card payment network set up by National Payments
Corporation of India (NPCI) at the behest of banks in India. The RuPay project had
been conceived by Indian Banks Association (IBA) and had the approval of
Reserve Bank of India (RBI).

RuPay LogoNational Payments Corporation of India (NPCI) has a plan to provide

a full range of card payment services including the RuPay ATM, RuPay
MicroATM, Debit, Prepaid and Credit Cards which will be accepted in India and
abroad, across various channels like POS, Internet, IVR and mobile etc.

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The initial focus of NPCI would be to approach those banks who have not been
issuing any payment card at all more specifically – Regional Rural Banks (RRBs)
and urban co-operative banks.

All Public Sector Undertakings (PSU) banks set to join RuPay system by the end
of year 2012. RuPay-based debit cards can be used by the consumers on the
Internet from September, 2012.

The government of India had launched India‟s first domestic payment card
network, RuPay, to compete with Visa Inc and Mastercard Inc.

16. What is foreign exchange reservers?

Foreign exchange reserves (also called Forex reserves) in a strict sense are only
the foreign currency deposits and bonds held by central banks and monetary
authorities.However, the term in popular usage commonly includes foreign
exchange and gold,SDRs and IMF reserve positions.

17. What is Bancassurance ?

Bancassurance stands for distribution of financial products particularly the
insurance policies (both the life and non-life), also called referral business, by
banks as corporate agents, through their branches located in different parts of the
country.

18. What is Money Laundering ?

Money laundering is the processes of concealing the source of obtain money.
Money or funds obtained through illegal activities are presented as legitimate.

19. What is the difference between Nationalized bank and Private Bank ?
A Nationalized bank is one that is owned by the government of the country. Since
the people decide who the government is, they are also referred to as public sector
banks. The government is responsible for the money deposited into the accounts of
these banks. Where as a private sector bank is one that is owned by an independent
individual or a company that is controlled by a few individuals. In short, the bank
is owned by someone else and they run the bank. The person owning/running the
bank is responsible for the money deposited into the accounts of these banks.

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20. What are non-perfoming assets?
A classification used by financial institutions that refer to loans that are in jeopardy
of default. Once the borrower has failed to make interest or principal payments for
90 days the loan is considered to be a non-performing asset.
Also known as "non-performing loan".

21. What is the Functions of RBI?

The Reserve Bank of India is the central bank of India, was established on April 1,
1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
The Reserve Bank of India was set up on the recommendations of the Hilton
Young Commission. The commission submitted its report in the year 1926, though
the bank was not set up for nine years.To regulate the issue of Bank Notes and
keeping of reserves with a view to securing monetary stability in India and
generally to operate the currency and credit system of the country to its
advantage." Banker to the Government: performs merchant banking function for
the central and the state governments; also acts as their banker.Banker to banks:
maintains banking accounts of all scheduled banks. 29 What is monetary policy?
A Monetary policy is the process by which the government, central bank, of a
country controls
(i) the supply of money,
(ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives
oriented towards the growth and stability of the economy.

22. What is SEZ?

SEZ means Special Economic Zone is the one of the part of government‟s policies
in India. A special Economic zone is a geographical region that economic laws
which are more liberal than the usual economic laws in the country. The basic
motto behind this is to increase foreign investment, development of infrastructure,
job opportunities and increase the income level of the people.

23. What is SIDBI?

The Small Industries Development Bank of India is a state-run bank aimed to aid
the growth and development of micro, small and medium scale industries in India.
Set up in 1990 through an act of parliament, it was incorporated initially as a
wholly owned subsidiary of Industrial Development Bank of India.

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24. What is TREASURY BILLS (TB)?
Treasury bills (T-Bills) are the short term liabilities of the central government
.theoretically government of India issued three types of T-bills through auctions,
namely 91 days, 182days,and 364 days. There are no treasury bills issued by state
government. Minimum amount of T –Bills is Rs. 2500and in multiple of RS.
2500.T-bills are issued at a discount and are redeemed at par from 1st April 1997
treasury bills have been replaced by WAYS AND MEANS ADVANCES .

25. What is COMMERCIAL PAPER (CP)?

commercial paper was introduced by RBI in 1991. It is a short term money market
instrument issued in the form of promissory note .Corporate; primary dealers and
the all India financial institution are eligible to issue CP. The maturity period of
each commercial paper is 7days to 1year from the date of issue .CP can be issued
denominations of Rs. 5lakh or multiples thereof. Only a schedule bank can act as
an issuing and paying agent (IPA) for issuance of CP.

26. What is CRM?

Customer Relationship Management (CRM) refers to the ability to understand,
anticipate and manage the needs of the customer, interaction and relationship
resulting in increased profitability through revenue and margin growth and
operational efficiencies.

27. What is Right to information Act?

The Right to Information act is a law enacted by the Parliament of India giving
citizens of India access to records of the Central Government and State
overnments.The Act applies to all States and Union Territories of India, except the
State of Jammu and Kashmir - which is covered under a State-level law. This law
was passed by Parliament on 15 June 2005 and came fully into force on 13
October 2005.

28. What is Recession?

A true economic recession can only be confirmed if GDP (Gross Domestic
Product)growth is negative for a period of two or more consecutive quarters.

29. What is dematerialisation ?

Dematerialisation is a process by which the paper certificates of an investor are
taken back by the company/registrar and actually destroyed and an equivalent
number of securities are credited in electronic holdings of that investor.

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30. What is Defivative ?
A derivative is a financial contract that derives its value from another financial
product/commodity (say spot rate) called underlying (that may be a stock, stock
index, a foreign currency, a commodity). Forward contract in foreign exchange
transaction, is a simple form of a derivative.

31. What is LAF ?

Liquidity Adjustment Facility (LAF) was introduced by RBI during June, 2000 in
phases, to ensure smooth transition and keeping pace with technological
upgradation.

32. What is a Repo Rate?

Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the
banks have any shortage of funds they can borrow it from RBI. A reduction in the
repo rate will help banks to get money at a cheaper rate. When the repo rate
increases, borrowing from RBI becomes more expensive

33. What is Reverse Repo Rate?

This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve
Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels
there is too much money floating in the banking system. Banks are always happy
to lend money to RBI since their money is in safe hands with a good interest. An
increase in Reverse repo rate can cause the banks to transfer more funds to RBI
due to this attractive interest rates.

34. What is CRR Rate?

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with
RBI. If RBI decides to increase the percent of this, the available amount with the
banks comes down. RBI is using this method (increase of CRR rate), to drain out
the excessive money from the banks.

35. What is Bank Rate?

Bank rate, also referred to as the discount rate, is the rate of interest which a
central bank charges on the loans and advances that it extends to commercial
banks and other financial intermediaries. Changes in the bank rate are often used
by central banks to control the money supply.

36. What is PLR?

The Prime Interest Rate is the interest rate charged by banks to their most
creditworthy customers (usually the most prominent and stable business

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customers). The rate is almost always the same amongst major banks. Adjustments
to the prime rate are made by banks at the same time; although, the prime rate
does not adjust on any regular basis. The Prime Rate is usually adjusted at the
same time and in correlation to the adjustments of the Fed Funds Rate. The rates
reported below are based upon the prime rates on the first day of each respective
month. Some banks use the name "Reference Rate" or "Base Lending Rate" to
refer to their Prime Lending Rate.

37. what is Bitcoin?

Bitcoin is a consensus network that enables a new payment system and a
completely digital money. It is the first decentralized peer-to-peer payment
network that is powered by its users with no central authority or middlemen. From
a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can
also be seen as the most prominent triple entry bookkeeping system in existence.

38. What is SLR Rate?

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before
providing credit to its customers. SLR rate is determined and maintained by the
RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR
is determined as the percentage of total demand and percentage of time liabilities.
Time Liabilities are the liabilities a commercial bank liable to pay to the customers
on their anytime demand. SLR is used to control inflation and propel growth.
Through SLR rate tuning the money supply in the system can be controlled
efficiently.

39. What is Deposit Rate?

Interest Rates paid by a depository institution on the cash on deposit.

40. What is Fiscal Policy?

Fiscal policy is the use of government spending and revenue collection to
influence the economy. These policies affect tax rates, interest rates and
government spending, in an effort to control the economy. Fiscal policy is an
additional method to determine public revenue and public expenditure.

41. What is the Banking Ombudsman Scheme?

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum
to bank customers for resolution of complaints relating to certain services rendered
by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of
the Banking Regulation Act, 1949 by RBI with effect from 1995.

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42. Which are the banks covered under the Banking Ombudsman Scheme,
2006?
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary
Co-operative Banks are covered under the Scheme.

43. What is Inflation?

Inflation is as an increase in the price of bunch of Goods and services that projects
the Indian economy. An increase in inflation figures occurs when there is an
increase in the average level of prices in Goods and services. Inflation happens
when there are fewer Goods and more buyers; this will result in increase in the
price of Goods, since there is more demand and less supply of the goods.
44. What is Deflation?
Deflation is the continuous decrease in prices of goods and services. Deflation
occurs when the inflation rate becomes negative (below zero) and stays there for a
longer period.

45. What is FII?

FII (Foreign Institutional Investor) used to denote an investor, mostly in the form
of an institution. An institution established outside India, which proposes to invest
in Indian market, in other words buying Indian stocks. FII's generally buy in large
volumes which has an impact on the stock markets. Institutional Investors includes
pension funds, mutual funds, Insurance Companies, Banks, etc.

46. What is FDI?

FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets
or a significant amount of ownership (stock) of a company in another country in
order to gain a measure of management control” (Or) A foreign company having a
stake in a Indian Company.

47. What is IPO?

IPO is Initial Public Offering. This is the first offering of shares to the general
public from a company wishes to list on the stock exchanges.

48. What is GDP?

The Gross Domestic Product or GDP is a measure of all of the services and goods
produced in a country over a specific period; classically a year.

49. What is GNP?

Gross National Product is measured as GDP plus income of residents from
investments made abroad minus income earned by foreigners in domestic market.

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50. What is Revenue deficit?
It defines that, where the net amount received (by taxes & other forms) fails to
meet the predicted net amount to be received by the government.

51. What is Disinvestment?

The Selling of the government stake in public sector undertakings.

52. What is Fiscal Deficit?

It is the difference between the government‟s total receipts (excluding borrowings)
and total expenditure.
53. What is National Income?
National Income is the money value of all goods and services produced in a
Country during the year.

54. What is bank and its features and types?

A bank is a financial organization where people deposit their money to keep it
safe.Banks play an important role in the financial system and the economy. As a
key component of the financial system, banks allocate funds from savers to
borrowers in an efficient manner.

55. What are Mutual funds?

Mutual funds are investment companies that pool money from investors at large
and offer to sell and buy back its shares on a continuous basis and use the capital
thus raised to invest in securities of different companies. The mutual fund will
have a fund manager that trades the pooled money on a regular basis. The net
proceeds or losses are then typically distributed to the investors annually. A
company that invests its clients' pooled fund into securities that match its declared
financial objectives. Asset management companies provide investors with more
diversification and investing options than they would have by themselves. Mutual
funds, hedge funds and pension plans are all run by asset management companies.
These companies earn income by charging service fees to their clients.

56. What is Cheque?

Cheque is a negotiable instrument instructing a Bank to pay a specific amount
from a specified account held in the maker/depositor's name with that Bank.A bill
of exchange drawn on a specified banker and payable on demand.“Written order
directing a bank to pay money”.

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57. What is demand Draft?
A demand draft is an instrument used for effecting transfer of money. It is a
Negotiable Instrument. Cheque and Demand-Draft both are used for Transfer of
money. You can 100% trust a DD. It is a banker's check. A check may be
dishonored for lack of funds a DD can not. Cheque is written by an individual and
Demand draft is issued by a bank. People believe banks more than individuals.

58. What is NABARD?

NABARD was established by an act of Parliament on 12 July 1982 to implement
the National Bank for Agriculture and Rural Development Act 1981. It replaced

the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell
(RPCC) of Reserve Bank of India, and Agricultural Refinance and Development
Corporation (ARDC). It is one of the premiere agency to provide credit in rural
areas. NABARD is set up as an apex Development Bank with a mandate for
facilitating credit flow for promotion and development of agriculture, small-scale
industries, cottage and village industries, handicrafts and other rural crafts.

59. What is SENSEX and NIFTY?

SENSEX is the short term for the words "Sensitive Index" and is associated with
the Bombay (Mumbai) Stock Exchange (BSE). The SENSEX was first formed on
1-1-1986 and used the market capitalization of the 30 most traded stocks of BSE.
Where as NSE has 50 most traded stocks of NSE.SENSEX IS THE INDEX OF
BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL SHOW DAILY
TRADING MARKS. Sensex and Nifty both are an "index”. An index is basically
an indicator it indicates whether most of the stocks have gone up or most of the
stocks have gone down.

60. What is SEBI?

SEBI is the regulator for the Securities Market in India. Originally set up by the
Government of India in 1988, it acquired statutory form in 1992 with SEBI Act
1992 being passed by the Indian Parliament. Chaired by C B Bhave.

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