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 a wide range of career
opportunities for graduates. So I want to take an opportunity to join in a
bank.Bank employee have respect in the society since there is direct
interaction with the customers.

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

:-Cheque: Cheque 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 the

transfer of money. It is a negotiable instrument.

3.What is commercial bank & its functions?

:-A commercial bank is a kind of financial institution that carries all the operations
related to deposit and withdrawal of money for the general public, providing loans
for investment, and other such activities. These banks are profit-making institutions
and do business only to make a profit.

Function of Commercial Bank:

The functions of commercial banks are classified into two main divisions.
(a) Primary functions
Accepts deposit : The bank takes deposits in the form of saving, current, and fixed
deposits. The surplus balances collected from the firm and individuals are lent to the
temporary requirements of the commercial transactions.
Provides loan and advances : Another critical function of this bank is to offer
loans and advances to the entrepreneurs and business people, and collect interest.
For every bank, it is the primary source of making profits. In this process, a bank
retains a small number of deposits as a reserve and offers (lends) the remaining
amount to the borrowers in demand loans, overdraft, cash credit, short-run loans,
and more such banks.
Credit cash: When a customer is provided with credit or loan, they are not provided
with liquid cash. First, a bank account is opened for the customer and then the
money is transferred to the account. This process allows the bank to create money.
(b) Secondary functions
Discounting bills of exchange: It is a written agreement acknowledging the
amount of money to be paid against the goods purchased at a given point of time in
the future. The amount can also be cleared before the quoted time through a
discounting method of a commercial bank.
Overdraft facility: It is an advance given to a customer by keeping the current
account to overdraw up to the given limit.
Purchasing and selling of the securities: The bank offers you with the facility of
selling and buying the securities.
Locker facilities: A bank provides locker facilities to the customers to keep their
valuables or documents safely. The banks charge a minimum of an annual fee for
this service.
Paying and gathering the credit : It uses different instruments like a promissory
note, cheques, and bill of exchange.

Types of Commercial Banks:

There are three different types of commercial banks.
Private bank –: It is a type of commercial banks where private individuals and
businesses own a majority of the share capital. All private banks are recorded as
companies with limited liability. Such as Housing Development Finance Corporation
(HDFC) Bank, Industrial Credit and Investment Corporation of India (ICICI) Bank, Yes
Bank, and more such banks.

Public bank –: It is a type of bank that is nationalised, and the government holds a
significant stake. For example, Bank of Baroda, State Bank of India (SBI), Dena
Bank, Corporation Bank, and Punjab National Bank.

Foreign bank –: These banks are established in foreign countries and have
branches in other countries. For instance, American Express Bank, Hong Kong and
Shanghai Banking Corporation (HSBC), Standard & Chartered Bank, Citibank, and
more such banks.
You might also want to know: What are the 4Ps of Marketing?

Examples of Commercial Banks

Few examples of commercial banks in India are as follows:
1. State Bank of India (SBI)
2. Housing Development Finance Corporation (HDFC) Bank
3. Industrial Credit and Investment Corporation of India (ICICI) Bank
4. Dena Bank
5. Corporation Bank
4. What is KYC?
:-The Reserve Bank of India (RBI) has advised banks to follow ‘KYC
guidelines’, wherein the
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

5. 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.

6. 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).
7. 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.

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.

8-Can you elaborate on the types of bank accounts?

:-The 5 most commonly used bank accounts to save or invest money are:
Savings Account- It is a commonly used deposit account that allows the account holders to
save and withdraw money while earning monetary interests.
Current Account- Meant for daily transactions, the current account is a type of deposit
account that allows the users to make multiple transactions regularly and withdraw money as many
times as required.

Fixed Deposits-Fixed deposits are used for long term savings. It entitles the investors to the
interest earned on deposits, given the money is not withdrawn for a fixed period. The rate of
interest for a fixed deposit is higher than the savings account and may vary from 4 %-7.5%.

Recurring Deposit Account- It is a personalized deposit account offered by banks to help

people with regular incomes, save a fixed amount every month while earning interests.

Demat Account- Demat Account is used to buy and store shares in an electronic format.
Investors living in India can use the regular Demat account and the NRIs can use the Repatriable
Demat account.

9-What is the source of income for banks?

:-Banks make most of their profit by lending loans. All loans are lent at a rate of interest
which acts as an income for banks.
Banks also earn from the additional charges levied on online bill payments, maintaining
accounts and other such services.

10. 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.
11. 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.

12. 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.

13. 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".

14. 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.

15. 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.

16. 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.

17. 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.

18. 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

19 . What is Reverse Repo Rate?

This is the 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.

20. 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 ( an
increase of CRR rate), to drain out the excessive money from the banks.

21. 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.
22. 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.

23. What is Deposit Rate?

:-Interest Rates paid by a depository institution on the cash on deposit.

24. 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.

25. 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.

26. What is Inflation?

Inflation is an increase in the price of a bunch of Goods and services that
project 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 an increase in the price of Goods since there are more demand
and less supply of the goods.

27. 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.

28. 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.

29. 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.

30. 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.

31. 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.

32. 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.

33. 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.

34. What is Disinvestment?

:-The Selling of the government stake in public sector undertakings.

35. What is Fiscal Deficit?

:-It is the difference between the government’s total receipts (excluding
borrowings) and total expenditure.

36. What is National Income?

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

37. 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.

38. 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.

39. What is Cheque?

:-A cheque is a document that order a bank to pay a certain sum of money
from a person’s account to another person or company’s account in whose
name the cheque has been issued.A cheque is used to make safe,secured
and hassle free payments.

Types of cheque-bearer or open/order/crossed/account payee/post

dated/stale/ante dated/truncated/traveler/multilated/banker’s
cheque
40. 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. The cheque is
written by an individual and Demand draft is issued by a bank. People
believe banks more than individuals.