Bank PO Interview Questions

1. What is Balance of Trade? The value of a country’s exports minus the value of its imports. Unless specified as the balance of merchandise trade, it normally incorporates trade in services, including earnings (interest, dividends, etc.) on financial assets.

2. What is Balanced Trade? When A balance of trade equal to zero. (exports-imports=0)

3. What is Balance of merchandise trade? The value of a country’s merchandise exports minus the value of its merchandise imports.

4. What is a favorable balance of trade? It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.

5. What is Balance of Payments? A list, or accounting, of all of a country’s international transactions for a given time period, usually one year. Payments into the country (receipts) are entered as positive numbers, called credits; payments out of the country (payments) are entered as negative numbers called debits. A single number summarizing all of a country’s international transactions: the balance of payments surplus.

6. What is Balance of payments adjustment mechanism? Any process, especially any automatic one, by which a country with a payments imbalance moves toward balance of payments equilibrium

7. What is Monopolistic Competition? A market structure in which there are many sellers each producing a differentiated product. Each can set its own price and quantity, but is too small for that to matter for prices and quantities of other producers in the industry.

9. A repo is essentially a secured loan. . If two currencies are both on the gold standard. The principle. especially factors of production. every country gets the lowest tariff that any country gets. An agreement to sell a security for a specified price and to buy it back later at another specified price. What is Gold Standard? A monetary system in which both the value of a unit of the currency and the quantity of it in circulation are specified in terms of gold. 13. What is Balance on current account ? A country’s receipts minus payments for current account transactions. Equals the balance of trade plus net inflows of transfer payments.8. What is a Bank rate The interest rate charged by a central bank to commercial banks for very short term loans. What is a Repo? Repo is “Repurchase Agreement. and reductions in tariffs to one country are provided also to others. fundamental to the GATT. What is MFN? MFN stands for Most Favoured Nation. 11. is adjusted as necessary to maintain a balanced budget. 12. What is a Balanced budget ? A government budget surplus that is zero. grow at the same rate. thus with net tax revenue equaling expenditure. That is. What is Balance on capital account? A country’s receipts minus payments for capital account transactions. 15. A balanced budget change in policy or behavior is one in which a component of the government budget. What is balanced growth of an Economy? Growth of an economy in which all aspects of it. and with some exceptions. 10. 14. then the exchange rate between them is approximately determined by their two prices in terms of gold. of treating imports from a country on the same basis as that given to the most favored other nation. usually taxes.

. . 2009 it was 5% in India (please check the latest figure by RBI) 17. 20. By changing the SLR rates. What is CRR Rate in India? Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. Bank Rate. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their anytime demand. Repo rate is the rate at which our banks borrow rupees from RBI. . If RBI decides to increase the percent of this. What is the Need of SLR? With the SLR (Statutory Liquidity Ratio). RBI can increase or decrease bank credit expansion. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. On March 4. On March 4. or gold or govt.16. the available amount with the banks comes down. What is SLR Rate? SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash. It is also helpful to control the expansion of Bank Credits. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. Due to this fine tuning of RBI using its tools of CRR. A reduction in the repo rate will help banks to get money at a cheaper rate. What is a Reverse Repo Rate? Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. the RBI can ensure the solvency a commercial bank. Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man. 2009 Reverse Repo Rate is 3. How is SLR determined? SLR is determined as the percentage of total demand and percentage of time liabilities. 18.5% (please check latest rate by RBI) 19. When the repo rate increases borrowing from RBI becomes more expensive. It can cause the money to be drawn out of the banking system. approved securities (Bonds) before providing credit to its customers. RBI is using this method (increase of CRR rate). RBI compels the commercial banks to invest in government securities like government bonds. Also through SLR. What is Repo Rate? Whenever the banks have any shortage of funds they can borrow it from RBI. to drain out the excessive money from the banks. 21.

it may then be due either to a surge in productivity or. What is a Barter economy? An economic model of international trade in which goods are exchanged for goods without the existence of money. What is Inflation in India? Increase in the overall price level of an economy. What is Deflation? A fall in the general level of prices. since there is more demand and less supply of the goods.. this was an agreement in 1988 by the Basel Committee of central bankers to measure the credit risk of commercial banks and set minimum standards for bank capital in order to reduce the likelihood of international repercussions due to bank failures. to a recession. the Basel II Framework is intended to promote a more forward-looking approach to capital supervision. Inflation happens when there are less Goods and more buyers.What is Basel II? The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures.22. Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. Most theoretical trade models take this form in order to abstract from macroeconomic and monetary considerations. 25. today . Deflation is the continuous decrease in prices of goods and services. 23. In addition. less favorably. 27. 26. 24. What is the main use of SLR? SLR is used to control inflation and propel growth. An increase in inflation figures occurs when there is an increase in the average level of prices in Goods and services. Through SLR rate tuning the money supply in the system can be controlled efficiently. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period.What is Basel I? Also known at Basel Capital Accord. Unlikely unless the rate of inflation is already low. this will result in increase in the price of Goods. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to the underlying risks that banks face. usually as measured by the CPI /WPI or by the implicit price deflator. one that encourages banks to identify the risks they may face.

2009 as compared to Rs.and in the future. What is a fiscal deficit? A deficit in the government budget of a country and represents the excess of expenditure over income. 29. As a result.1 and 2.39 billion rupees in April 2008. in a recession. Black markets in . 329. It includes the contract specifying what transport service will be provided and the limits of liability.5 trillion. and to develop or improve their ability to manage those risks. 32. India’s fiscal deficit widened to Rs. So this is the amount of borrowed funds required by the government to meet its expenditures completely. The total amount of black money globally is estimated between $2. Terminology seems only to be used in agriculture. The receipt given by a transportation company to an exporter when the former accepts goods for transport. a category of subsidies based on status in WTO: red=forbidden. The black money runs a parallel economy adversely affecting the distribution of wealth & income in the economy. 30.What is a Beggar thy neighbor policy? For a country to use a policy for its own benefit that harms other countries. in which something is bought and sold outside of official government-sanctioned channels. Black markets tend to arise when a government tries to fix a price without itself providing all of the necessary supply or demand. where in fact there is no red box. amber or orange=go slow. 31. tariffs and/or devaluation to create employment. What is a Bill of Lading? This term is normally used in shipping industry. 28. blue=subsidies tied to production limits. The efforts of the Basel Committee on Banking Supervision to revise the standards governing the capital adequacy of internationally active banks achieved a critical milestone in the publication of an agreed text in June 2004. green=permitted. This is roughly about seven percent of the world’s GDP.What is a Black Market? A black market is an illegal market. What is Black Money ? Black Money is the unaccounted money concealed from the tax authorities.58 billion in April. 33. Examples are optimal tariffs and. it is intended to be more flexible and better able to evolve with advances in markets and risk management practices. 541. What is the use of color boxes in WTO category of subsidies? Used with a color.

What is the difference between Monopoly and Monopsony ? In monopsony only one buyer faces many sellers. and are found in all six of the Bank’s geographical regions. education and adult literacy and also or economic vulnerability based on instability of economy . VAT are indirect taxes. 39. Excise tax. The term blue chip comes from casinos.What are Middle Income Countries ? Middle-income countries (MICs) are the 86 countries that fall into the middle-income range set by the Bank’s World Development Indicators. 35. even when business is faring worse than usual. 38. Income tax and property tax are examples of direct tax. 34. They account for just under half of the world’s population. Besides if thse countries show human resource weakness based on indicators of nutrition.What is Policy of Laissez Faire? Laissez Faire is a French term and means no interference. health.What is a blue chip company? Why it is blue color only used in such companies? A blue chip is concerned with stocks & shares of company.What are LDCs or Least Developed Countries? Least Developed Countries (LDCs) are countries which as per United Nations show the lowest indicators of socioeconomic development. Due to stable earnings and no extensive liabilities these companies are called blue chip companies. Sales tax. 36. 37.What is an Indirect Tax? This type of tax is not paid by someone directly to the authorities and it is actually passed on to the other in the form of increased cost. with the highest income MIC having a per capita income 10 times that of the lowest. They are levied on goods and services produced or purchased. a LDC must have an income of $ 900 to escape this tag. It is a doctrine that states that government generally should not intervene in the marketplace.foreign exchange almost always exist when there are exchange controls.What is a direct Tax? A direct tax is that which is paid directly by someone to taxing authority. 40. A country which has three-year average Gross national Income per capita of less than US $750 is tagged as LDC. Most blue chip stocks pay regular dividends. It is a . where blue chips stand for counters of the highest value. They are not shifted to somebody else. So this is called Buyer’s Monopoly. India is not an LDC. are home to one-third of people across the globe living on less than $2 per day. Currently UN has tagged 49 countries in LDC. They cover a wide income range. which are well established and whose purchase is considered extremely safe. They have lowest Human Development Index ratings of all countries in the world.

16 billion in 2008-09. May 20.f. CCI will ultimately replace the Monopolies and Restrictive Trade Practices Commission (MRTPC) ofIndia.rare situation in today’s economy. A vostro account is maintained by a foreign bank in India with their corresponding bank. Import from China was $ 24. 43. The scheme aims at facilitating credit delivery to the farfetched areas ofIndia. market shares & conditions besides regulating firms.e.What are Nostro & Vostro Accounts ? A nostro account is maintained by an Indian Bank in the foreign countries for a facility of easy clearing of their transactions. which got doubled in 3 years. 41. there is no delay because the foreign corresponded bank would already have credited the nostro account of the paying bank while issuing the demand draft.3 % of all the imports of India. There are members of the committee from NABARD and SIDBI. The Opinion of this committee is that full financial inclusion is possible only if it makes a facility of opening of no frill accounts backed by other specialized services. 2009 and is responsible for investigating the mergers. the “monopsonist” may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers. 42. . As the only purchaser of a good or service.What is Lead Bank Scheme? Lead bank scheme was introduced around 40 years ago and recently it was in the news as a high level committee chaired by RBI Deputy Governor Usha Thorat was constituted to review and revitalize this scheme.From which country India imports maximum? From China. This is 10. Thus the scheme focuses upon financial inclusion. 44.What is Gold Standard? A system of setting currency values whereby the participating countries commit to fix the prices of their domestic currencies in terms of a specified amount of gold.What is the main function of Competition Commission of India? CCI is an independent body which become operational w. 45. In monopoly one seller faces many buyers. For instance. if the bank pays a demand drawn on it by its correspondent bank.

RBI has approved the opening of new branches only on the condition that at least half of such branches are opened in under-banked areas as notified by the regulator. created by the International Monetary Funds in 1967.What is a Free Float Exchange Rate system? An exchange rate system characterized by the absence of government intervention. It should not have defaulted in maintenance of SLR and CRR during the last two years. its net worth should show improvement 3. 51. RRB should fulfill the following conditions to become eligible for opening of new branch/es.What is the meaning of Financial Inclusion? Today is is well recognized that large population of India is out of reach of the formal banking services. 1994. town or village. . Financial inclusion is the concept which has been floated to bring the most of the rural population / area under the net of the financial and banking services. The opening of branches by banks is governed by the provisions of Section 23 of the Banking Regulation Act. What is SATMO? SATMO is Satellite Money Order Service introduced by Postal Department Govt.46. 1.What is concept sustainable Development? Meeting the needs of the present without compromising the ability of future generations to meet their needs is called sustainable development. The RRB should be making operational profits. 48. This concept is popular in present context of development. Thus. the location of the existing place of business without the prior approval of the ReserveBank of India (RBI). 2. In terms of these provisions. The value of SDR is based on a portfolio of widely used currencies and they are maintained as accounting entries and not as hard currency or physical assets like Gold. 49. of India on December 16.What are the requirements to open a New Branch in Rural Area? Since 2006. 1949.What are Special Drawing rights SDR? SDR are new form of international reserve assets. it is mandatory for RRBs to seek prior approval/ license from Rural Planning and Credit Department (RPCD) of RBI before opening of new branches/offices. However this scheme could not make its headway due to functional complicacies. banks cannot open a new place of business inIndia or abroad or change otherwise than within the same city. 47. Also known as a clean float. 50. Its net NPA ratio should not exceed 8 per cent.

To make the “Made in India” label a symbol of quality. The slogan ‘Jago Grahak Jago’ is part of the publicity campaign undertaken in the last few years. What is Golden Handshake Scheme? Golden handshake scheme is a Govt. planning. 1996. 409 crores has been approved by the Cabinet Committee on Economic Affairs on 24. 55.52. What is “Vande Mataram Scheme” ? Vande mataram schem is a nationwide programme aimed at improving ante and post-natal care–which was launched on February 9. tips to avoid nutritional problems and anemia and counseling on small family norm and is a major initiative in Public Private partnerships during emergency.08. What is Gender Budgeting? Gender budgeting is the process of conceiving. competitive price. What is a revolving credit? Revolving credit is a type of credit that does not have a fixed number of payments. What is Jago Grahak Jago”? The Consumer Awareness Scheme for the XI Plan amounting to a total of Rs. 2004.01. It was established on July 11. This scheme has been formulated to give an increased thrust to a multi media publicity campaign to make consumers aware of their rights. What is India Brand Equity Fund? This is a scheme to promote Indian Brands in Overseas Markets with the primary objective of brand promotion and not export promotion.The credit cards are examples of revolving credit. To achieve this objective joint campaigns have been undertaken/are being undertaken with a number of Government Departments. 57. Corporate revolving credit facilities are typically used to provide liquidity for a company’s day-to-day operations. ‘Jago Grahak Jago’ has become the focal theme through which issues concerning the functioning of almost all Government Departments having a consumer interface can been addressed. They are renewed automatically until the notice of cancellation is receieved. approving. 56. 53. of India scheme introduced as a Voluntary retirement Scheme (VRS) in Industrial Policy Resolution 1991 for reducing the pressure of extra employees on public sector enterprises. 54. . monitoring. reliability and service to the customer & to project India as a reliable supplier of quality goods and services. executing. The time of repayment is specified. analyzing and auditing budgets in a gender-sensitive way. The scheme envisages free ante and postnatal check-ups. Gender Budgeting is actually an attempt to women upliftment without any sex discrimination while formulating the policies and making allocation for them.

planning/ policy/ programme formulation. What is the principle of Diminishing returns? This principle says that if one factor of production is fixed and constant additions of other factors are combined with this. allocation of resources. the marginal productivity of variable factors will eventually decline. Soft currency can be in the form of paper. 59. producing one more unit of output costs more and more in variable inputs. 58. According to this relationship. . beyond some point. What are factors of production? The resources and the inputs which are required to produce a good or service is called factor of production. each additional unit of the variable input yields smaller and smaller increases in output. Gender Responsive Budget and Gender Mainstreaming are outcomes of Gender Budgeting. electronic or debt-based “IOUs” which have in the past been used in place of hard currency. This currency has limited convertibility into gold and other currencies. in a production system with fixed and variable inputs (say factory size and labor). The basic categories are land labor and capital. What is Soft Currency? Soft currency is opposite of hard currency and it indicates a type of currency whose value may depreciate rapidly or that is difficult to convert into other currencies. reprioritization of resources. impact assessment. 60. assessment of needs of target groups.Gender Budgeting is a process that entails incorporating a gender perspective at various stages. implementation. Conversely.

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