Basic Banking Interview Questions & Answer pdf

Basic Banking Interview Questions & Answer pdf

Basic Banking Interview Questions & Answer pdf

Hello Aspirants,

Preparing for a banking interview involves a mix of knowledge about the industry, your own skills, and the ability to present yourself confidently. Here are some tips and common questions you might encounter in a basic banking interview:

1. Research:

Understand the bank’s history, mission, products, and services.
Stay updated on current financial news and trends.
2. Know Your Resume:

Be ready to discuss your education, work experience, and any relevant skills.
Highlight any financial or customer service-related experiences.
3. Common Questions:

Why do you want to work in the banking industry?
What skills and qualities make you a good fit for this role?
How do you handle stressful situations?
Can you provide an example of a time when you demonstrated excellent customer service?
How do you stay updated on financial trends and changes?
4. Banking Knowledge:

Understand basic banking terminology (savings accounts, loans, interest rates, etc.).
Know the difference between retail banking and investment banking.
5. Customer Service Skills:

Emphasize your ability to communicate clearly, handle customer inquiries, and provide solutions.
Highlight any experience in dealing with difficult situations and maintaining a positive attitude.
6. Teamwork:

Explain how you’ve worked effectively as part of a team in the past.
Banking often involves collaboration with colleagues from different departments.
7. Problem Solving:

Share examples of times when you’ve identified issues and implemented solutions.
Banking roles often require quick thinking and problem-solving skills.
8. Adaptability:

Discuss how you’ve adapted to changes in your previous roles.
The banking industry can be dynamic, with evolving regulations and technologies.
9. Ethics and Integrity:

Emphasize your commitment to maintaining confidentiality and upholding ethical standards.
Banking involves handling sensitive customer information and financial transactions.
10. Ask Questions:
– Prepare thoughtful questions about the bank’s culture, growth opportunities, or the specific role you’re interviewing for.
– It shows your genuine interest in the position.

11. Dress and Body Language:
– Dress professionally and maintain good posture and eye contact.
– Your appearance and demeanor contribute to the overall impression you make.

Download English Grammar Notes PDF

Most Important Basic Banking Interview Questions & Answer

1.  What are the main functions of a commercial bank?

  • Accept Deposits
  • Provide Loans
  • Provide locker facilities
  • Dealing in foreign exchange
  • Exchange of Securities

2. What is the overdraft protection service?

  • Overdraft protection is a service offered by banks to their customers. In that case, the bank will transfer money automatically from one account to another account that does not have the cash to prevent cheque return or to clear shopping or electricity bills.

3. What are the different kinds of commercial banks?

  • Public Sector Banks
  • Private Sector Banks
  • Foreign Banks

4. What do you understand by a commercial bank?

  • A commercial bank is a type of bank that provides services such as accepting deposits, offering checking account services, making business loans, offering basic investment products, and offering basic financial products such as certificates of deposit (CDs) and savings accounts for individuals and small businesses.
  • The commercial bank is the most common bank where most people do their banking..

5. What are the things you should keep in mind while opening a bank account?

  • Prior starting a bank account, you enter the which type of bank. You want to open a saving account, you have to check the deposit’s interest rate and whether the interest rate remains consistent for the period. You should also check for different debit card options banks provide when you open a new bank account. You want to open a checking account, look how many cheques they given for free to use.

6. What do you understand by fixed APR and variable APR?

  • Fixed APR: In fixed APR, the imposed interest rate will be the same throughout the term of the loan or mortgage.
  • Variable APR: In variable APR, the interest rate can be changed without notice, according to some other factors like ‘prime rate’.

7. What is investment banking?

  • Investment banking is a specific division of banking used to manage portfolios of financial assets and capital for other companies, governments, and other entities.
  • It also maintains portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.

8. What are the documents required to open a bank account?

  • Photographs,
  • Proof of identity such as Aadhar card/ Pan Card etc.,
  • Address proof for residence verification.

9. What is the prime rate used in APR?

  • In some countries like the USA, the prime rate is the interest rate decided by banks for their preferred customers, having a good credit score.
  • In the variable Annual Percentage Rate, interest depends on the prime rates.

10. What is the APR in Banking?

  • APR (Annual Percentage Rate) is a charge / interest that the bank imposes on their customers for using their services like loans, credit cards, mortgage loans etc. Interest on this service is calculated annually.

11. What are the different types of banks?

  • There are several different kinds of banks, such as retail banks, commercial or corporate banks, agricultural banks, cooperative banks, investment banks, etc.
  • In most countries, the central bank of nation Government regulates all kinds of banks. In the case of India, it is the Reserve Bank of India (RBI)

12. What do you understand by amortization and negative amortization?

  • The term amortization specifies the loan repayment in installment to cover the principal amount with interest.
  • When the loan repayment is less than the loan’s accumulated interest, then negative amortization takes place. If the negative amortization occurs, it will increase the loan amount instead of decreasing it.
  • It is also called ‘deferred interest’

13. What is loan grading in banking?

  • Loan grading is the classification of the loan based on various risks and parameters like repayment risk, borrowers credit history etc.
  • The system places a loan on one to six categories, based on the stability and risk associated with the loan.

14. What do you understand by the line of credit?

  • The line of credit is an agreement between the bank and the person /company who takes the loan.
  • This agreement specifies that the bank has to provide a certain amount of loans on the borrower’s demand.
  • The borrower can withdraw the amount at any moment and pay the interest only on the amount withdraws.

15. What do you understand by a foreign draft?

  • A foreign draft is a bank draft established at a foreign bank and used to pay a foreign currency transaction.
  • It is an alternative to foreign currency. You can purchase a foreign draft from the commercial banks after paying a charge according to their bank’s rules and norms.
  • A foreign draft is preferred for sending money as this method of sending money is cheaper and safer.
  • It is also very fast, and the receiver gets the fund quicker than a cheque or cash transfer.

16. What is the adjustment credit?

  • In the USA, an adjustment credit is a short-term loan provided by the Federal Reserve Bank to a smaller commercial bank when it needs to maintain reserve requirements and support short term lending when they are short of cash.
  • The commercial banks secure adjustment credits with promissory notes when interest rates are high, and the money supply is short.

17. What do you understand by consumer bank?

  • Consumer banks are newly introduced in the banking sector in some countries like the USA and Germany.
  • These banks provide loans to their customers to buy a TV, Car, furniture, consumer electronics etc. and provide a simple option of easy payment through easy and small installments.

18. What is a balloon payment?

  • The balloon payment is the final lump sum payment that is due.
  • When the entire loan payment is not amortized within the loan’s specified time, the remaining balance is due as the final repayment to the lender.
  • A balloon payment can occur within an adjustable-rate or fixed-rate mortgage.

19. What are the different ways to operate a bank account?

  • Branch or Over the counter service
  • Telephone or Mobile banking
  • Internet banking
  • ATM ( Automated Teller Machine) etc.

20. What is the debt to income ratio?

  • The debt to income ratio is your monthly debt payments divided by your gross monthly income.
  • It is calculated by dividing a loan applicant’s total monthly debt payment by his monthly gross income.

21. What is the definition of a bank?

  • Bank is a financial institution licensed by the Government to receive deposits and provide loans to their customers.
  • Banks provide many other financial services such as wealth management, currency exchange, and safe deposit boxes or security boxes to keep your jewelry and other invaluable assets safe.

22. What do you understand by debt-to-income ratio?

  • The debt-to-income ratio is calculated by all your monthly debt payments divided by your gross monthly income.
  • This is used to measure your ability to manage the monthly payments to repay the money you want to borrow.

23. What are the different types of banking software applications available in the Indian Banking Industry?

  • Core Banking System
  • ATM banking (Automated Teller Machine)
  • Internet Banking System
  • Loan Management System
  • Credit Management System
  • Investment Management System
  • Stock market Management System
  • Financial Management System

24. What are the different types of accounts in banks?

  • Savings accounts
  • Checking accounts
  • Money market accounts
  • Certificates of deposit (CDs)
  • Retirement accounts

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

  • Cheque and demand draft are used to transfer an amount between two accounts of the same or different bank.
  • But, there is a key difference between them.
  • Cheques can only be issued by an individual who holds the account in a bank.

26. What is a credit check?

  • A credit check is also known as a credit search.
  • It is done by the bank when they have to check your credit report to understand your financial behavior.
  • It is done to ensure that an individual is capable enough to meet the financial obligation for its business/ any other monetary transaction.

27. What do you understand by inter-bank deposit?

  • When you deposit an amount in one bank meant for another bank, this process is an inter-bank deposit.
  • The bank for which you deposited the money is referred to as the correspondent bank.

28. How banks make a profit?

  • Additional charges on services like annual maintenance charges, online bill payment charges etc.
  • Banking Value chain
  • Interest spread
  • By accepting deposits from the customers
  • By providing funds to borrowers on interest

29. What do you understand by credit-netting?

  • Credit setting is a system used to reduce credit checks on a financial transaction.
  • This agreement is very common among large financial firms and other financial institutions.
  • It contains all the future and current transaction into one agreement, removing the need for credit cheques on each transaction and making the transactions effectively combined.

30. What do you understand by the term Co-Maker?

  • When a person takes a loan, he may have to take a guarantee with him.
  • The person who signs a note to guarantee the loan’s payment on behalf of the main loan applicant is called a co-maker or a signer.

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