Candidates appearing for bank interviews, must get acquainted to the most asked bank interview questions and answers to do well in the interview round. It is crucial for them to know basic concepts and terminologies in the sector.
Candidates who are soon going to be appearing for Bank Interviews, must note these most commonly asked 25 bank interview questions and answers. The answer you provide the interviewer with, gives them a picture of what your expectations are out of a banking career. Importantly, interviewees must limit their answers to the banking sector.
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Top 25 Bank Interview Questions and Answers
The aspiring candidate must prepare themselves to face questions concerning both academic and aptitude during the interview process. Notably, the Interview round is one of the most crucial rounds, as it sets the ground for appointment of the candidate as an employee in the company/bank. Hence, it is important for candidates to know of the most asked bank interview questions.
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Question 1: Why did you decide to pursue a career in banking?
Sample Answer: The baking industry plays an eminent role in our economy, and at present it is in an advantageous stage. Besides, the roles and opportunities offered in the banking sector will nurture my skills and knowledge. Due to the enigmatic nature of the banking industry, and its current status in the economic scenario is the reason behind why I want to build a career in the banking sector.
Tip: A very common interview question which gives the interviewer an idea as to why your choice of career is banking. Avoid talking about salary, reputation, perks etc. Make sure you answer with reasons and factual opinions.
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Question 2: Can you take me through the types of bank accounts?
Sample Answer: The five mostly used bank accounts are, Checking Account, Saving Account, Money Market Account, and CD (Certificate of Deposits) Account.
- A Checking Account does not allow you to earn interest, unlike a savings account, whereas there is no limit for withdrawal in a Checking Account.
- A savings account is an account where you can save and earn interest on your money. There is a withdrawal cap, and you need to maintain a minimum balance to keep the account active.
- Monkey market accounts have qualities of both checking and savings accounts. Here you may withdraw money and earn high interest on it. The Account can be opened with a minimum balance.
- The Certificate of Deposits account, lets you deposit your money for a fixed period of time, i.e., 5 to 7 years, and likewise the account holder earns interest on it. The rate of interest depends on the bank.
Tip: Make sure the candidate’s answer is to the point, brief and covers all the essential features.
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Question 3: What are the various ways to operate or access bank accounts?
Sample Answer: Bank accounts can be accessible through Internet Banking, Mobile Banking, At the Brank or Over the Counter Service and through ATMs (Automated Teller Machine).
Tip: Candidates must not get confused when answering these simple questions. They must relax and address the answer as it is.
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Question 4: Are you aware of the old and new tax regimes?
Sample Answer: Since the Union Budget of 2020-21, the taxpayers of the country can select between the old tax regime, which consists of existing income tax deductions and exemptions, and new tax regime, which involves lower tax rates and lesser exemptions.
Tip: Prepare in advance on the tax regimes, both current and previous ones.
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Question 5: Explain Amortization?
Sample Answer: Amortization is essentially an accounting process which divides the total amount of a loan into small fixed payments to be paid to the lender/bank. To break it down, it is the technique of repaying a loan in installments to write-off its book value over an amount of time. Negative amortization on the other hand is when the loan payment amount for a period is lower than the amount to be returned.
Tip: Candidates must include a little more than just the description of the question asked.
Question 6: How does one calculate the debt to income ratio?
Sample Answer: In order to calculate the debt to income ratio, one should divide the total debt amount by the applicant’s gross income.
Tip: Candidates must just state the formula.
Question 7: Explain “Investment Banking”?
Sample Answer: Investment Banking is the management of portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.
Question 8: What is a consumer bank?
Sample Answer: Consumer bank is a new bank in the banking industry. Although, these banks are functional only in the USA and Germany. Likewise, these banks lend loans to their customers to buy TV, Car, and Furniture. Also, the customer is given the option of easy payment through installments.
Tip: Learn about international banking sectors, and stay up-to-date with the latest banking news.
Question 9: What is meant by “Balloon Payment”?
Sample Answer: Balloon payment is the final lump sum amount that is due. This happens when the complete loan sum is not amortized over the life of the loan, the remainder amount is due as final repayment to the lender. Balloon payments may occur within a flexible rate or fixed rate of mortage.
Question 10: Name the software banking applications available in the sector?
Sample Answer: Internet banking system, ATM banking, Core banking system, Loan management system, Credit management system, Investment management system, Stock-market management system, and Financial management system are the software banking applications available in the sector.
Question 11: How do banks earn money?
Sample Answer: Banks profit the most by giving out loans. Loans are given at a rate of interest, which acts as an income source for banks. Moreover, banks earn through additional charges on online bills, accounts and other services.
Question 12: Name the different types of loans?
Sample Answers: Five types of loans given out by banks are, Secured personal loan, Unsecured personal loan, Small Business loan, Mortgage loan, and Auto loan.
Question 13: Who is a co-maker?
Sample Answers: The co-maker is the person who signs a guarantee note of payment of loan on behalf of the main loan applicant.
Tip: Research on basic terms used in the banking sector, and what they mean.
Question 14: State eight functions of the Reserve Bank of India?
Sample Answer: The eight most significant functions of the RBI are,
- The RBI is in-charge of the issue and exchange of currency in notes and coins.
- They also regulate and supervise commercial banks and financial systems.
- RBI manages the foreign exchange to aid global trade and development.
- Similarly, the RBI supports national banks and their financial agendas.
- They act as a banker to both Central and State governments.
- The RBI acts as a central bank to all other banks, and maintains records of all banking related accounts.
- On the other hand, the RBI formulates and practices the national monetary policy.
- It is the responsibility of the RBI to retain economic stability across sectors and facilitate growth.
Question 15: What do you mean by a Foreign Draft?
Sample Answer: A foreign draft is a process to send money to people abroad. Also known to be an alternative to foreign currency, the foreign draft is available for purchase at commercial banks. Moreover, it is a much cheaper and safer method to transfer money internationally.
Question 16: Explain ACH in your own terms?
Sample Answer: ACH translates to Automated Clearing House, is identified to be the electronic transfer of funds. It permits the users to collect payments electronically by debiting it through the customer’s savings account. ACH is also a quicker payment method and is a great substitute for cash, cheques and credit cards.
Question 17: State the difference between Cheque and Demand Draft?
Sample Answer: Cheques are issued by the account holder, whereas DD’s are issued by the bank. Further, cheques can bounce if account balance is insufficient, while the amount for DD must be paid beforehand. In case of cheques, the drawer and the payee are two different individuals. When it comes to demand draft, the drawer and payee is the bank.
Question 18: What are the mandatory documents needed to open a bank account?
Sample Answer: Per the latest RBI guidelines, banks need to follow the KYC format, where the bank requires the personal information of the account holder. Next, primary documents required by the bank are aadhar card, pan card, and address proof.
Question 19: Explain Loan Grading?
Sample Answer:Loan grading is the allocation of loans based on several risks such as repayments, borrowers credit history and more. The bank sheds out loans based after evaluation based on stability and risk.
Question 20: Can you tell us what is the line of credit?
Sample Answer: Line of credit is an agreement between the bank and the borrower, when lending out a loan on the borrower’s demand. Here the borrower may withdraw the amount at any time, and pay the interest only on the amount withdrawn.
Question 21: Name the types of Commercial banks?
Sample Answer: The types of commercial banks are retail, corporate, non-traditional and securities and investment.
Question 22: What are payroll cards in banking?
Sample Answer: Payroll cards are a type of smart cards issued by banks to regulate salary payments between employer and employees. Via payroll cards, the employer can send payment to the employee without them having a bank account.
Question 23: What are the two card based payment options for account/non-account holders?
Sample Answer: Two payment options are credit and debit cards.
Question 24: What is a “Crossed Cheque”?
Sample Answer: A crossed cheque demonstrates that the amount should be deposited in the payees account and cannot be cashed by the bank over the counter.
Question 25: What is the cashier's check?
Sample Answer: A cashier’s cheque is issued by the bank on behalf of the account holder of the customer and acts as a guarantor of payment. The pay in turn is done from the bank’s own fund and signed by the cashier. It is notably issued when rapid settlement is required.
Interview Tips to Note
With all the technical and non-technical questions coming to play, candidates must be confident and follow the below general instructions to ace the bank interview.
- Be ready to ask questions to the interviewer: Ask about the job profile and organisation, gives you clarity and also reflects enthusiasm.
- Be Punctual: Candidates must make sure they reach at least 30 minutes before the interview commences. This gives ample time for the candidates to get accustomed to the surroundings.
- Look Presentable: First impressions last the longest, and also helps the candidate feel confident about the interview.
- Practise correct body language: Banking professionals are expected to smart and their body language is an important aspect, as it reflects intelligence, dedication and accountability.