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Interview Questions
Why do you want to enter
banking?
> You need to talk
about Banking – what the interviewer seeks for is a person who is flexible to
be along with the given timings, someone who can cope up with writing bits and
bobs or a person who can benefit them with more development .Your answer can
have following bulleted points.
- Banking is a fast changing environment
- Retail banking is now very competitive – from telephone
banking, retailers and etc Banking is thus now largely sales driven.
# You can even talk about IT
getting changes and clearing banks offers a wide range of career opportunities
for graduates – not just in branch banking but also in financial services,
consultancy and corporate banking.
Have you applied to any other
areas apart from banking?
Here off course your answer will hold some other finance or sales and marketing
careers – insurance or accountancy, altogether these careers should have skills
related to banking.
How do you feel about committing
yourself to another three years of exams?
The professional examinations that you will almost certainly be required to
take as part of your training are not always difficult in themselves, but do
require determination and focus- especially as much of your study will be done
in the evenings after a hard days work.
You should also be aware of
the range of qualifications open to you – many of the large clearing banks
offer the opportunity to gain qualifications in marketing, personnel or
accountancy – not just banking.
Tell me about an experience
in which you had to use tact?
Tact and diplomacy are important qualities in retail banking – the customer is
(almost!) always right. You may have to tell an account holder diplomatically
why they can’t have a loan for example, without provoking them into moving
their account elsewhere.
To answer this type of question, think through everything you have done in the
last five years – school, university, sports, clubs, societies, travel,
vacation jobs etc. and try to think of situations where you had to demonstrate
this and other qualities – do this before your interview.
If you have completed a number of employer application forms, then you should
already have done this as this type of question is now common on application
forms.
Who are our major competitors
and what differences do you notice in our products?
The company will be expecting that you have done your research on the industry
generally. You should be familiar with the bank’s products and services – literature
on these can be picked up at any branch. Read the banks brochures and annual
reports – these may be in the careers information room.
Be aware of current trends in
the market and try to find out what each bank is doing in these areas.
What is SLR?
Every bank
is required to maintain at the close of business every day, a minimum
proportion of their Net Demand and Time Liabilities as liquid assets in the
form of cash, gold and un-encumbered approved securities. The ratio of liquid
assets to demand and time liabilities is known as Statutory Liquidity Ratio
(SLR). Present SLR is 24%. (reduced w.e.f. 8/11/208, from earlier 25%) RBI is
empowered to increase this ratio up to 40%. An increase in SLR also restrict
the bank’s leverage position to pump more money into the economy.
What is SLR ? (For Non
Bankers)
SLR stands for Statutory Liquidity Ratio. This term is used by bankers and
indicates the minimum percentage of deposits that the bank has to maintain in
form of gold, cash or other approved securities. Thus, we can say that it is
ratio of cash and some other approved to liabilities (deposits) It regulates
the credit growth in India.
What are Repo rate and
Reverse Repo rate?
Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to
the banks. When the repo rate increases borrowing from RBI becomes more
expensive. Therefore, we can say that in case, RBI wants to make it more
expensive for the banks to borrow money, it increases the repo rate; similarly,
if it wants to make it cheaper for banks to borrow money, it reduces the repo
rate
What are Repo rate and
Reverse Repo rate?
Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to
the banks. When the repo rate increases borrowing from RBI becomes more
expensive. Therefore, we can say that in case, RBI wants to make it more
expensive for the banks to borrow money, it increases the repo rate; similarly,
if it wants to make it cheaper for banks to borrow money, it reduces the repo
rate
Thus, we can conclude that
Repo Rate signifies the rate at which liquidity is injected in the banking
system by RBI, whereas Reverse repo rate signifies the rate at which the
central bank absorbs liquidity from the banks.
What is the difference
between Bank Rate and Repo Rate?
Bank Rate vs Repo Rate
Bank Rate is
the rate at which RBI allows finance to commercial banks in India. There are
difference types of refinance that can be availed by banks and these are linked
to Bank Rate. Thus, banks can borrow at this rate only to the extent of their
eligibility for refinance.
On the other hand, Repo is a
money market instrument, which enables collateralised short term borrowing and
lending through sale/purchase operations in debt instruments. Under a repo
transaction, a holder of securities sells them to an investor with an agreement
to repurchase at a predetermined date and rate. In the case of a repo, the
forward clean price of the bonds is set in advance at a level which is
different from the spot clean price by adjusting the difference between repo interest
and coupon earned on the security. In the money market, this transaction is
nothing but collateralised lending as the terms of the transaction are
structured to compensate for the funds lent and the cost of the transaction is
the repo rate. Thus, a bank can borrow under repo provided he has the extra
securities which it can lend temporarily to RBI for borrowing short term funds.
What is relation between
Inflation and Bank interest Rates?
Now a days,
you might have heard lot of these terms and usage on inflation and the bank
interest rates. Bank interest rate depends on many other factors, out of that
the major one is inflation. Whenever you see an increase on inflation, there
will be an increase of interest rate also
What is a bank?
A bank is a
financial institution whose primary activity is to act as a payment agent for
customers and to borrow and lend money. It is an institution for receiving,
keeping, and lending money
What is the activity of Banks?
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting
cheques deposited to customers’ current accounts. Banks also enable customer
payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by
accepting funds deposited on current account, accepting term deposits and by
issuing debt securities such as banknotes and bonds. Banks lend money by making
advances to customers on current account, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.
Banks provide almost all
payment services, and a bank account is considered indispensable by most
businesses, individuals and governments. Non-banks that provide payment
services such as remittance companies are not normally considered an adequate
substitute for having a bank account.
Banks borrow most funds from
households and non-financial businesses, and lend most funds to households and
non-financial businesses, but non-bank lenders provide a significant and in
many cases adequate substitute for bank loans, and money market funds, cash
management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to.
What is Banking Business?
“Banking
Business” means the business of receiving money on current or deposit account,
paying and collecting cheques drawn by or paid in by customers, the making of
advances to customers, and includes such other business as the Authority may
prescribe for the purposes of this Act.
What is Accounting for Bank
Accounts?
Bank
statements are accounting records produced by banks under the various
accounting standards of the world. Under GAAP and IFRS there are two kinds of
accounts: debit and credit. Credit accounts are Revenue, Equity and
Liabilities. Debit Accounts are Assets and Expenses. This means you credit
credit accounts to increase their balances and you debit debit accounts to
increase their balances.
This also means you debit
your savings account every time you deposit money into it (and the account is
normally in deficit) and you credit your credit card account every time you
spend money from it (and the account is normally in credit).
However, if you read your
bank statement, it will say the opposite- that you have credited your account
when you deposit money, and you debit when you withdraw it. If you have cash in
your account you have a positive or credit balance and if you are overdrawn it
will say you have a negative or a deficit balance.
The reason for this is
because the bank, and not you, has produced the bank statement. Your savings
might be your assets, but it is the bank’s liability, so your savings account
is a liability account which is a credit account and should have a positive
credit balance. Your loans are your liabilities but the bank’s assets so they
are debit accounts which should have a negative balance.
Below where bank
transactions, balances, credits and debits are discussed, they are done so from
the viewpoint of the account holder which is traditionally what most people are
used to seeing.
What are the commercial roles
of the Banks ?
However the commercial role
of banks is wider than banking, and includes:
- However the commercial role of banks is wider than
banking, and includes:
- issue of banknotes (promissory notes issued by a banker
and payable to bearer on demand)
- processing of payments by way of telegraphic transfer,
EFTPOS, internet banking or other means
- issuing bank drafts and bank cheques
- accepting money on term deposit
- lending money by way of overdraft, installment loan or
otherwise
- providing documentary and standby letters of credit
(trade finance), guarantees, performance bonds, securities underwriting
commitments and other forms of off balance sheet exposures
- safekeeping of documents and other items in safe
deposit boxes
- currency exchange
- sale, distribution or brokerage, with or without
advice, of insurance, unit trusts and similar financial products as a ‘financial
supermarket’
What are the Economic
functions of Banks?
The economic functions of
banks include:
1. issue of
money, in the form of banknotes and current accounts subject to cheque or
payment at the customer’s order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par and
effectively transferable by mere delivery in the case of banknotes, or by
drawing a cheque, delivering it to the payee to bank or cash.
2. netting and settlement of payments
— banks act
both as collection agent and paying agents for customers, and participate in
inter-bank clearing and settlement systems to collect, present, be presented
with, and pay payment instruments. This enables banks to economise on reserves
held for settlement of payments, since inward and outward payments offset each
other. It also enables payment flows between geographical areas to offset,
reducing the cost of settling payments between geographical areas.
3. credit intermediation – banks borrow and lend
back-to-back on their own account as middle men
4. credit quality improvement
– banks lend
money to ordinary commercial and personal borrowers (ordinary credit quality),
but are high quality borrowers. The improvement comes from diversification of
the bank’s assets and the bank’s own capital which provides a buffer to absorb
losses without defaulting on its own obligations. However, since banknotes and
deposits are generally unsecured, if the bank gets into difficulty and pledges
assets as security to try to get the funding it needs to continue to operate,
this puts the note holders and depositors in an economically subordinated
position.
5. maturity transformation — banks borrow more on demand
debt and short term debt, but provide more long term loans. In other words;
banks borrow short and lend long. Bank can do this because they can aggregate
issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g.
withdrawals and redemptions of banknotes), maintain reserves of cash, invest in
marketable securities that can be readily converted to cash if needed, and
raise replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets) because they have a high and more well known
credit quality than most other borrowers.
What are the different channels of Banking you use in your daily life ?
Banks offer many different
channels to access their banking and other services:
- A branch, banking centre or financial centre is a
retail location where a bank or financial institution offers a wide array
of face-to-face service to its customers.
- ATM is a computerized telecommunications device that
provides a financial institution’s customers a method of financial
transactions in a public space without the need for a human clerk or bank
teller. Most banks now have more ATMs than branches, and ATMs are
providing a wider range of services to a wider range of users. For example
in Hong Kong, most ATMs enable anyone to deposit cash to any customer of
the bank’s account by feeding in the notes and entering the account number
to be credited. Also, most ATMs enable card holders from other banks to
get their account balance and withdraw cash, even if the card is issued by
a foreign bank.
- Mail is part of the postal system which itself is a
system wherein written documents typically enclosed in envelopes, and also
small packages containing other matter, are delivered to destinations
around the world. This can be used to deposit cheques and to send orders
to the bank to pay money to third parties. Banks also normally use mail to
deliver periodic account statements to customers.
- Telephone banking is a service provided by a financial
institution which allows its customers to perform transactions over the
telephone. This normally includes bill payments for bills from major
billers (e.g. for electricity).
- Online banking is a term used for performing
transactions, payments etc. over the Internet through a bank, credit union
or building society’s secure website.
How many type of banks there
are ?
Banks’
activities can be divided into retail banking, dealing directly with
individuals and small businesses; business banking, providing services to
mid-market business; corporate banking, directed at large business entities;
private banking, providing wealth management services to high net worth
individuals and families; and investment banking, relating to activities on the
financial markets. Most banks are profit-making, private enterprises. However,
some are owned by government, or are non-profits.
Central banks are normally
government owned banks, often charged with quasi-regulatory responsibilities,
e.g. supervising commercial banks, or controlling the cash interest rate. They
generally provide liquidity to the banking system and act as the lender of last
resort in event of a crisis.
Type of Retail Banks
- Commercial bank: the term used for a normal bank to distinguish it from
an investment bank. After the Great Depression, the U.S. Congress required
that banks only engage in banking activities, whereas investment banks
were limited to capital market activities. Since the two no longer have to
be under separate ownership, some use the term “commercial bank” to refer
to a bank or a division of a bank that mostly deals with deposits and
loans from corporations or large businesses.
- Community Banks: locally operated financial institutions that empower
employees to make local decisions to serve their customers and the
partners
- Community development banks: regulated banks that provide
financial services and credit to under-served markets or populations.
- Postal savings banks: savings banks associated
with national postal systems.
- Private banks: manage the assets of high net worth individuals.
- Offshore banks: banks located in jurisdictions with low taxation and
regulation. Many offshore banks are essentially private banks.
- Savings bank: in Europe, savings banks take their roots in the 19th or
sometimes even 18th century. Their original objective was to provide easily
accessible savings products to all strata of the population. In some
countries, savings banks were created on public initiative, while in
others socially committed individuals created foundations to put in place
the necessary infrastructure. Nowadays, European savings banks have kept
their focus on retail banking: payments, savings products, credits and
insurances for individuals or small and medium-sized enterprises. Apart
from this retail focus, they also differ from commercial banks by their
broadly decentralised distribution network, providing local and regional
outreach and by their socially responsible approach to business and
society.
- Building societies and Landesbanks: conduct retail
banking.
- Ethical banks: banks that prioritize the transparency of all
operations and make only what they consider to be socially-responsible
investments.
- Islamic banks: Banks that transact according to Islamic principles.
Below are some of the frequently asked questions during an Interview.To
answer them, I have provided some tips.
Question : Tell /Describe about yourself ( you will be asked this 90% )
Answer : Don’t recite your resume.Tell about your education, experience,
projects worked ,passion etc.,Make sure you complete this within 2-3mins.
Q: Why should we hire you into our organization
A : This would be perfect time to tell about your strengths,achievements
& assets. Compare your profile with the job role & justify that you
will be a best fit for the job.
Q : What are your strengths & weakness ?
A: Again this is also a commonly asked question to test how much you know of
yourself.Make sure the Strengths you say have some relation to the job you
applied.’I am very good in english’ can be said as ‘I have good
communication skills’ ,
Weakness – ‘I don’t have any weakness’ means you are not ready to talk
about it.Similarly don’t say something like, ‘Im short tempered & get
angry very soon’ – It gives an impression that you are not fit to work in
group.Say something which does not affect the working & also describe about
the steps taken to overcome that.
Q: Where do you see yourself after 5 years ?
A: This question would be asked to check how much you know about the career
path.
‘After 5 years,I want to be in your seat’ wont work in any case.Think
realistically, understand the growth opportunities of that job & put it
across to them.
Q : Why are you shifting from your current employer/company (for experienced
people)
A : This would be a tricky question & you have to answer by choosing
proper words.Give the real reason, but make sure you don’t put the blame on
your previous company nor onto yourself.
These are just few questions that can be asked during an Interview ,but the
list is exhaustive.So be prepared to answer any question with confidence.But ,
Never ever get tensed . It pulls your confidence down & will throw you
out of the competition.
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1)
What do you know about our Bank?
2) What is the difference between debit card
and credit card?
3) What is the difference between draft and cheque?
4) Tell me about yourself?
5) Why do you want to join our bank?
6) Tell me something about RBI?
7) Advantages of nationalization of bank.
8) Address of SBI Corporate office.
9) What do you understand by core banking?
10) What do you mean by CRR, SLR, and Repo
rate?
11) What do you understand by inflation?
12) Meaning of terms liquidity, excise duty, currency etc.
These were the common questions asked to me in the interview. I hope these
questions are going to help you all in your interview. Very soon in my next
post I will be giving answers of these questions.
Here
are some sample question which are frequently asked by interviewer
- tell us about yourself?
- tell us about your family?
- last 30 days current affairs?
- last 5 days newspaper?
- what is bank?
- why would you want to go in the bank?
- several types of bank?
- crr 'slr' repo rate' reverse repo rate'
and
some questions from your academic session.Here is a link which may be useful
for you
Five
skills that build leadership depth