Banking offers numerous career options for freshers and experienced professionals. Nevertheless, along with the academic qualifications and aptitude, the interview process has to be cleared which consists of varied types of interview questions.
A job in banking may or may not require experience but it does require an impressive interview round.
The finance and banking industry attempts a range of entrances for graduates from various academic regulations such as corporate banking, Customer relationship management, researchers or tax analysts, analysts etc.
In the article below, let's explore the top 21 banking interview questions and answers which will help you clear the interview with flying colours.
Top 21 Banking Interview Questions and Answers are:
Question 1: Brief me about yourself?
Answer: It is the first fundamental question that every interviewer asks a candidate to start the conversation and know about the person. So, always be positive and introduce yourself starting with your name, qualification and all the other required information that is important for an interviewer to know. Just complete it within 2 minutes so that it should not be extended as a boring conversation.
Question 2: Why do you want to join the banking sector?
Answer: In this question, be logical and answer it by telling why banking sectors have influenced people with all the facts and figures, ready as to why the banking sector is the fastest-growing sector. Do not start by telling them that you want to have a stable career or some personal view. Just make it well versed which can form a correct opinion of your answer.
Question 3: What are the types of accounts in a bank?
Answer: Be straight forward and start your answer by telling the information which can match the question asked by an Interviewer. The types of accounts in banks are:
Checking Account: You can access the account as a savings account but, unlike saving account, you cannot earn interest on this account. The benefit of opening a checking account in a bank is there is no limit for withdrawal.
Money Market Account: This account gives both the benefit of savings accounts and checking accounts. You can withdraw the amount and yet you can earn higher interest on it. This type of account can be opened with a minimum balance.
Certificate of Deposit Account (CD): By the opening of such an account you have to deposit your money for a fixed period like five years or seven years, and you will earn the interest on it. The rate of interest will be decided by the bank, and you cannot withdraw the funds until the fixed period expires.
Saving Account: You can save your money in such an account and also earn interest on it. The number of withdrawals is limited and need to maintain the minimum amount balance in the account to remain active.
Question 4: What are the necessary documents a person requires to open an account in a bank?
Answer: As per the RBI advises banks to follow the Know Your Customer (KYC) guidelines where the bank obtains some personal information of the account holder. The primary documents that are needed to open an account are photographs, proof of identity proof like Aadhar card or Pan Card etc., and address proof as well.
Question 5: What are the types of Commercial Banks?
Answer: The types of Commercial Banks are:
Retail or Consuming Bank: It is small to the midsize branch that directly deals with consumer’s transaction rather than corporate or other banks.
Corporate or business banking: Corporate banking deals with cash management, underwriting, financing and issuing of stocks and bonds.
Non- traditional Options: There are many non-banks entities that offer financial services like that of the bank. The entities include credit card companies, credit card report agencies and credit card issuers.
Securities and Investment Banking: Investment banking manages portfolios of financial assets, commodity and currency, corporate finance, fixed income, debt and equity writing etc.
Question 6: What is the annual percentage rate (APR)?
Answer: APR is known as the Annual percentage rate. It is a charge or interest that the bank imposes on their customers for using their services like loans, credit cards etc. The interest is calculated annually.
Question 7: What is Amortization and negative amortization?
Answer: Amortization refers to the repayment of the loan by installment to cover principal amount with interest whereas, negative amortization is when the repayment of the loan is less than the loans accumulated interest, then negative amortization takes place.
Question 8: What is the debt to income ratio?
Answer: Debt to income ratio is calculated by dividing a loan applicant’s total debt payment by his gross income.
Question 9: What is loan grading?
Answer: 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.
Question 10: What do you mean by Co-Maker?
Answer: A person who signs a note to guarantee the payment of the loan on behalf of the main loan applicant’s is known as Co-maker or signer.
Question 11: What is the line of credit?
Answer: Line of credit is an agreement between the bank and a borrower, to provide a certain amount of loans on borrower’s demand. The borrower can withdraw the amount at any moment and pay the interest only on the amount withdrawn.
Question 12: How do banks earn a profit?
Answer: The bank earns profit in various ways:
Accepting deposit
Banking Value chain
Interest spread
Providing funds to borrowers on interest
Additional charges on services like checking account maintenance, online bill payment etc.
Question 13: What is the payroll card?
Answer: Payroll cards are types of smart cards issued by banks to facilitate salary payments between employer and employees. Through a payroll card, the employer can load salary payments onto an employee’s smart card, and the employee can withdraw the salary even if he or she doesn’t have an account in the bank.
Question 14: What is card-based payment?
Answer: There are two types of card payments:
Credit Card Payment
Debit Card Payment
Question 15: What is a Payday loan?
Answer: A Payday loan refers to a small amount and a short term loan available at the high-interest rate.
Question 16: What is a charge off?
Answer: Charge off is a declaration by a lender to a borrower for non- payment of the remaining amount when borrower badly falls into debt. The unpaid amount is settled as a bad debt.
More related questions for banking interview:
Question 17: What are the different types of loans offered by commercial banks?
Answer: Borrowers can avail of loans from lending institutions. Let us talk about the different types of loans available in the market.
1. Personal Loans
2. Credit Card Loans
3. Home Loans
4. Car Loans
5. Two-Wheeler Loans
6. Small Business Loans
7. Payday Loans
8. Cash Advances
9. Home Renovation Loan
10. Agriculture Loan
11. Gold Loan
12. Loan Against Credit Card
13. Education Loan
14. Consumer Durable
Question 18: What are the different types of fixed deposits?
Answer: Before you invest in FD, you should be aware of the different types of fixed deposits that would help you maximize returns.
1. Standard Bank Fixed Deposits
2. Corporate Fixed Deposits
3. Tax-Saving Fixed Deposits
4. Senior Citizen Fixed Deposits
5. Cumulative Fixed Deposits
6. Non-cumulative Fixed Deposits
7. Flexi Fixed Deposits
8. NRI Fixed Deposits
Question 19: What is a home equity loan?
Answer: Home equity loans provide the opportunity to secure a loan at a fixed interest rate by leveraging the portion of your home that you fully own.
Question 20: What is the interbank deposit?
Answer: An interbank deposit is a mutual agreement between two banks, wherein one bank holds funds in an account on behalf of another institution. To facilitate this arrangement, the holding bank establishes a due-to account for the other bank.
Question 21: What is a non-performing asset?
Answer: A non-performing asset (NPA) refers to a loan or advance that has not received timely principal or interest payments for a duration of 90 days or more.
So, these are the questions and answers that can easily help you to clear the interview panel and get the job position in the banking sector. You can also surf for more questions through Google that can lend you as a helping hand.
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