PGDP

QUESTIONS ON DOMAIN KNOWLEDGE

1.Define Banking?

Accepting Deposits for the purpose of lending and investment and

withdrawable by means of cheque,bills,etc.

2.List the core principles of banking?

Profitability, Security, Secrecy and Liquidity.

3.Define Cheque?

A cheque is a bill of exchange drawn on a specified banker and not

expressed to be payable otherwise than a demand and it includes the
electronic image of a truncated cheque in electronic form(Sec 5 of
Banking Regulation Act).

4.What are the three essential characteristic features of money?

Durability, Portability, Divisibility.

5.What is scheduled commercial bank?

The bank which is listed in the second schedule of RBI Act 1934.

6.What you mean by Public sector bank?

Public sector banks(PSBs) are banks where a majority stake(i.e.

more than 50%) is held by a Government.

7.What you mean by nationalized bank?

Nationalized banks are those banks which were taken over by the
Government of India.

8.What are Credit risk/Liquidity risk/Interest rate risk of Banks?

Credit risk is the risk of default of loan-Here borrower has no

intention to repay.

Liquidity risk is probability of loss arising from a situation

where there will not be enough cash and/or cash equivalents to meet
the needs-Here borrower has intention to repay but money is readily
available.

Interest rate risk is the risk of loss due to a change in interest

rates.

9.What you understand by financial intermediary? List various

categories.

 One who is acting as a bridge between who have money and who
have-nots is financial intermediary.

 It can be classified as organized sector and unorganized sector.

10.What is the difference between NBFC and bank?

 Bank can accept demand deposit (SB & CA) and participate in
payment system (issue of DD/PO/Cheque or transfer of funds)

 NBFC cannot accept demand deposit (but can accept term

deposit) and cannot issue DD/PO/Cheque or transfer of funds.

 DICGC insurance cover available only to banks.

11. What are the functions of the bank?

 Intermediary services(Accepting deposits and Lending)

 Payment services (Collection and Payment)

 Other services (Locker,Safe custody,Gold coin sale,Distribution of

products such as Mutual Fund, Insurance, Advisory Services etc.)

12. What is difference between Demand Deposits and Term

Deposits?

 DD is payable on demand.

 TD is payable after a particular tenor.

13. What is a difference between Savings and Current Accounts?

SAVINGS BANK CURRENT ACCOUNT

It is for savings purpose.
Interest is paid by the bank.
Number of transactions are
restricted.
Minimum balance is lower.
Generally Overdraft is not
allowed.
It is for business purpose.
No Interest is paid.
No restrictions.
Minimum balance is higher.
Overdraft is allowed.

14. What is the difference between Recurring deposit and Fixed

deposit?

Recurring deposit Fixed deposit

Regular monthly investment for a One Lump sum investment for a
term. term.
Term – 6 months to 10 years. Term – 7 days to 10 years.
15. How interest is calculated and paid in respect of
SB,CA,FD,RD,CD ?
NATURE OF ACCOUNTS INTEREST IS CALCULATED INTEREST IS PAID
Savings bank Daily balance basis Half
yearly/Quarterly
Current account Monthly or Daily balance Nil
basis
Fixed deposit Quarterly basis Quarterly monthly
Recurring deposit Quarterly basis At maturity
Cumulative deposit Quarterly basis At maturity
16. What are all coming under pre-sale advances and post-sale
advances?

PRE-SALE POST-SALE
OD, CC, PC Cheque BP, Bill purchase, Bill
Discount, Bill Negotiation
17.What is the difference between Fixed deposit and Cumulative
deposit?

Fixed deposit Cumulative deposit

Interest is paid Interest is paid at maturity &
periodically(quarterly or Interest is cumulative(interest
monthly) & Simple interest. gets interest)
18. What is Loan to Value Ratio?

It is a percentage of value of the assets and loan given to the

borrower.

19. What is Margin?

The amount of contribution by the borrower.

20. Differentiate Floating rate and Fixed rate.

Floating rate – Interest rate is variable based on the market.

Fixed rate – Interest rate is constant for specific period (generally 5

yrs)

21. Differentiate Primary security and Collateral security?

 Security created out of the loan proceed is called primary

security.

 Additional security is taken for the loan other than the primary is
called collateral security.

22 . Which rate is better – Floating or Fixed?

 Floating rate is beneficial to the customer when interest rate is

in downward trend.

 Fixed rate is beneficial to the customer when interest rate is in

upward trend.
 23. Explain NRO, NRE, FCNR, RFC, EFFC
CATEGORY TYPES OF CURRENCY LOCAL INWARD OUTWARD JOINT
ACCOUNT REMITTANCE REMITTANCE REMITTANCE ACCOUNT
WITH
NRO SB INR Allowed Allowed Restricted Resident
CA
FD
RD
NRE SB INR Not Allowed Allowed NRI and
CA Allowed Resident
FD as F or S
RD
FCNR FD US$ Not Allowed Allowed NRI
RD CAN$ Allowed
AUS$
GBPS
EURO
JAP YEN
RRC CA US$ Not Allowed Allowed Resident
GBPS Allowed
EEFC CA US$ Not Allowed Allowed Resident
GBPS Allowed

24. What are the methods of creating charge over an asset in favor
of bank?

LIEN is the right of the banker to retain possession of the goods and
securities owned by the debtor and to retain till the debt due from the
later is paid and given as security for a loan.

HYPOTHECATION means a charge in or upon any movable property

existing or future, created by a borrower in favour of a secured
creditor.

PLEDGE means bailment of goods for the purpose of providing security

for payment of debt or performance of promise.
MORTGAGE is transfer of interest in immovable property to secure
an advance, loan, or an existing debt or an future debt or performance
of an obligation.

ASSIGNMENT is a mode of providing security to a banker for an

advance .It is transfer of right,property or a debt. The transferor is
called assignor and the transferee assignee.

25. What is the difference between pledge and hypothecation?

 In pledge - ownership with the banker, possession is with the

borrower.Bank can sell the property without court
intervention,after issuing demand notice.

 In hypothecation – Both ownership and possession are with the

borrower.Only after taking possession of the asset,we can sell.

26. What is the difference between Lien and Assignment?

 Lien is the right to retain an asset.

 Assignment is the method to transfer the rights.

27. What is the difference between OD and Loan?

 In OD, you can withdraw within overall limits and is a running

account. It is operated by cheque Leaves.

 In loan, disbursement are made in one or a few installments with

EMI pro-vision for repayment .

28. What is the difference between Overdraft and Cash Credit?

OVER DRAFT CASH CREDIT

Generally the primary security is Generally the primary security is
fixed assets. current assets.
Can be without security. Security is either
Hypothecation/Pledge.
Both are running account – Both are operated by cheque books.
29. What is the difference between Term loan and Leasing?

TERM LOAN LEASING

Ownership is with the borrower. Ownership is with the banker
Borrower pays installments and Borrower pays rent
interest

30. What you understand by packing credit?

 It is a pre-sale advance to exporters for purchase of raw

materials.

 It is given against export orders.

 It is to be adjusted either from the proceeds of foreign remittance

or bill negotiation.

 Other name of PC is Pre-shipment Credit.

31.What is the difference between Fund-based limit and Non-fund

based limit?

 In Fund based limit, fund (money) is released by the bank.

Ex:OD,CC,Term loan, Cheque BP, Bill purchase, Bill

discount,Bill Negotiation.

 In non-fund based limit, fund is not released by the bank. Only

an assurance letter is given

Ex.Guarantee, Letter of credit.

32.What is Letter of credit?

A written commitment to pay by a buyers importers bank(issuing

bank) to the sellers or exporters bank (accepting bank) or negotiating
bank or paying bank)

(or)
 A letter of credit, guarantees payment of a specified sum in a
specified currency, provided the seller meets precisely defined
condition and submits the prescribed documents within a fixed time
frame for export/import of goods.

33.What is Guarantee? What are the different types of guarantee?

A contract between guarantor and beneficiary to ensure

performance of a promise or discharge the liability of a third person. If
promise is broken or not performed, the guarantor pays contracted
amount to the beneficiary.

TYPES:

 Money Guarantee

 Performance Guarantee

34. Fixed asset and Working Capital Financing :

Fixed asset is for long term and hence loan is term loan. Asset
created here are either mortgage(Building),
Hypothecation(Machineries etc..) either one lump sum disbursal or in
installments as per requirement.

Working Capital Financing is for purchashing day to use and

is current asset. The loan is running account as OD/OCC. This is short
term loan for one year and can be renewed. The type of security is
hypothecation.

35. List out the various products offered by banks as a part of

payment services :

 Draft

 Payorder

 Fund transfer between two bank accounts of same bank

 RTGS
  NEFT

 Cheque book facility

36. What is a difference between Cheque and DD?

CHEQUE
Issued by a customer of a bank
with a direction to pay the
amount to the payee named in
two cheque.
No charges payable.
DD
Issued by a bank of a branch on
the request of a customer and
payable at another branch/city
of two same bank.
Commission payable on purchase
of DD.

37. What is the difference between DD and PO?

DD PO
Issued by a branch of a bank and Issued by a branch of a bank and
payable at another branch of the payable at the same branch.
same bank.

38. What is a difference between cheque and multicity cheque?

CHEQUE MULTICITY CHEQUE

A Cheque is issued by a customer
of two bank to himself or to any
of his client and is payable only
at the bank it is issued(Drawee
bank).
A Multicity cheque is one that
can be written by the customer in
favour of his client and is
payable at par at all branches of
the bank. This is an order cheque
and is available to both SB/CA.

39.What is the difference between NEFT and RTGS?

NEFT-National Electronic Funds Transfer. From one bank to

another bank, funds are transferred with no minimum and maximum
amount electronically within a day and settlement between bank’s on
net basis.
 RTGS- Real Time Gross Settlement - An electronic funds
transfer system from one bank to another bank funds are transferred
instantaneously used for amount of Rs,2.00 lacs and above. Minimum-2
lakh and Maximum-no limit.

40. What is the difference between Debit card and Credit card?

DEBIT CARD CREDIT CARD

Debit cards are used to pay for
goods in shops and to withdraw
money at ATM/POS. The amount
is automatically taken from the
customer’s account when spent
it. So the customer should have
enough money in his/her
account.
Credit cards when uses, the
purchase or cash withdrawn is
changed to a line of credit for
which the customer is billed
later.

41. What are the features of Travel card?

 For Travel to abroad and for payment in foreign currencies.

 Ease of usage.

 Superior security through 3D secure and CHIP and PIN

technology.

 24x7 on line service.

 Exciting offers and discounts.

 Free replacement card in the kit.

42. List out the products offered by banks as a part of collection

services.

 Cash management services

 Collection of Cheques

 Issue of debit and credit cards

43. What are the two types under Transfer?

 Inter Transfer

 Intra Transfer

44.What is NECS? Differentiate NECS-Debit and NECS-Credit.

NECS (National electronic clearing service)

▪ Facilitate centralized processing for repetitive and bulk payment

instructions). Sponsor banks shall submit NECS data at a single center
viz at Mumbai while NECS (CREDIT) shall facilitate multiple credits to
beneficiary accounts debit of a user with the sponsor bank. The NECS
(DEBIT) shall facilitate multiple debits to destination account holders
against single credit to user account.

▪ The system would leverage on core-Banking solution of member banks

for centralized posting of inward NECS transactions.

45. What you understand by Cheque Collection?

Collection of Cheque issued by a customer of another bank to

our customer. It may be local clearing or outstation cheque collection.

(or)

Cheque presented by a bank customer issued by h is client

payable at another bank are being collected by clearing for the credit
of their account.

46. What you understand by Cash Management Service?

Cash Management Service is the corporate process of collecting

money from creditors and payments to their debtor and managing
cash, so as to ensure a company’s financial stability and solvency.
47. What is Bill Collection?

Bill Collection is the handling of domestic and export

documents which are presented to the bank by the seller to collect
payment from the buyer through the buyer’s bank.

48. What is Forex?

Foreign Exchange Service is the market in which currencies in

the world are traded. The forex market is the place where each
country/people can pay for their requirements and receive their
entitlements in their own home currency. Banks are among the active
members of the foreign exchange market.

49. What are all the documents classified under ‘title to goods’?

 LR (Lorry Receipt)

 RR (Railway Receipt)

 Cargo bill or Airway bill

 Bill of lading

50. What is Bill of Exchange?

A Written, Unconditional order by one party(the drawer) to

another(the drawee) to pay a certain sum, either immediately(sight
bill) or on a fixed date(term bill or usance bill) for payment of goods
and for services received.

51. What are the two types of BOE?

 Sight bill or Demand bill

 Usance bill

52. What are the products offered by banks within distribution

services?

 Insurance selling
  Mutual fund selling

 Gold coin sales

 Tax collection

53. What do you mean by Demat?

Demat is the process of converting the securities held in

physical form into an electronic record form or to directly allot
securities in electronic form.

(or)

Demat account is the holding of securities in electronic

form.

54. Explain what is 2 in 1 account?

The 2 in 1 account is a wealth management product that

provides with the benefit of automatic transfer of surplus funds in
SB/CA to fixed deposit for a year with predetermined block. Liquidity is
always available for withdrawing the funds by reverse sweep from FD
to SB/CA. You will earn higher interest for FD accounts.

55.What do you understand by 3 in 1 account?

3 in 1 account is a joint offering by banks and securities

limited that integrates the Trading account, Bank and demat account
to sell and buy securities without the involvement of brokers.

56. What is PDC?

Post dated cheque – Cheque dated later than current date.

57. What is reverse mortgage?

It involves senior citizen borrowers mortgaging the house

property to a lender, who then provide a lump sum or a stream of
income to the borrower during the latter’s lifetime. The senior citizen
borrower is not required to service the loan during his lifetime.

58.What is FII and FDI

Foreign Institutional Investor (FII)

An FII means an institution established or incorporated outside

India, which proposes to make investment in Indian securities, and is
registered with SEBI.

Foreign Direct Investment(FDI)

The Foreign Direct Investment means “cross border investment

made by a resident in one economy in an enterprise in another
economy, with the objective of establishing a lasting interest in the
investee economy.

FDI is also described as “investment into the business of a country by a

company in another country”. Mostly the investment is into production
by either buying a company in the target country or by expanding
operations of an existing business in that country”. Such investments
can take place for many reasons, including to take advantage of
cheaper wages, special investment privileges (e.g. tax exemptions)
offered by the country.

59.Who is NRI?

A non-resident Indian (NRI) is a person resident outside India

who is an Indian citizen who stays abroad for employment / carrying
on business or vocation outside India or stays abroad

60.Who is POI?

A Person of Indian Origin means a citizen of any country (other

than Bangladesh or Pakistan), if:

• He at any time held an Indian passport; or

• He or either of his parents or grand parents was a citizen of India by
virtue of the Constitution of India or the Citizenship Act,1955 (57 of
1955); or

• He is a spouse of an Indian citizen, or of a person referred to in (a) or

(b) above.

61. Who is OCB?

Overseas Corporate Body means a company, Partnership firm,

Society and other corporate body owned directly or indirectly to the
extent of atleast 60% by NRE and includes overseas trust.

62. What is the difference between mandate and power of

attorney?

An individual holding savings bank account can give power of

attorney or mandate allowing them to operate the bank account.Power
of attorney is to be registered whereas mandate to be signed by as per
bank format.

Mandate is generally a direction to the banker to act upon

where as Power Of Attorney acts as general notice and authority.

In a power of attorney can name same are to manage property

or your person or both.A power of attorney may be limited to one act or
be general in nature.But mandate may be more activities if are become
incapable or incapacitated,the power of attorney immediately becomes
invalid,whereas a mandate appear once the court has decided you are
incapable.

63.What is Capital Market?

The market in which long-term securities such as stocks and

bonds are bought and sold.
64.What is Money Market?

Money market is not an organized market like Bombay Stock

Exchange but is an informal network of banks, financial institutions
who deal in money market instruments of short term like CP, CD and
Treasury bills of Government.

65. Who is the regulator of capital market? SEBI

66. Who is the regulator of money market? RBI

67. Who is the regulator of foreign exchange market? RBI

68. Who is the regulator of commodity market? SEBI

69. Who is the regulator of insurance? IRDAI

70.List out the Functions of RBI?

 Monetary control including controlling inflation and bank

supervision.

 Exercised through CRR, SLR, bank and repo rate (main instrument
available to RBI to control prim rates of lending banks).

 Issue and Management of Currencies.

71.What is CRR?What is the present rate?

Cash Reserve Ratio(CRR) is the amount of funds that the banks

have to keep with the RBI. If the central bank decides to increase the
CRR, the available amount with the banks comes down.The RBI uses the
CRR to drain out excessive money from the system.

Present CRR rate is 4%.

72.What is SLR?What is the present rate?

Statuatory Liquidity Ratio(SLR) is the Indian Government term

for reserve requirement that the commercial banks in India require to
maintain in the form of gold,government approved securities before
providing credit to the customers.The SLR is determined by a
percentage of total demand and time liabilities.

Present SLR rate is 19.5%

73.What is Bank Rate?What is the present rate?

Bank Rate is the interest rate at which a nation’s central bank

lends money to domestic banks, often in the form of very short -term
loans.Whenever a bank has a shortage of funds,they can typically
borrow from the central bank based on the monetary policy of the
country.It is also the rate for rediscounting of bills.

Present Bank Rate is 6.25%

74.What is Repo Rate?What is the present rate?

Repo rate is the rate at which RBI lends to its client general ly
against government securities.

Present Repo Rate is 6.00%

75.What is Reverse Repo Rate?What is the present rate?

Reverse Repo Rate is the rate at which RBI borrows money from the
commercial banks.

Present Reverse Repo Rate is 5.75%

76. What is OMO? (Open market operations)

This refers to sales or repurchase of government securities

(central or state) by RBI in the open market with a view to increase
(injecting) or decrease (withdrawing) the liquidity in the banking
system and there by affect the loanable funds with banks.

77.What is NABARD?

NABARD: National Bank for Agriculture & Rural

Development was setup in 1982 under the Act of 1981. NABARD
finances and regulates rural financing and also is responsible for
development agriculture and rural industries.

78.What is EXIM Bank?

Export–Import Bank of India is the premier export finance

institution in India, established in 1982 under Export-Import Bank of
India Act 1981. Since its inception, Exim Bank of India has been both a
catalyst and a key player in the promotion of cross border trade and
investment.

79.What is DICGC?

Deposit Insurance and Credit Guarantee Corporation

(DICGC) is a subsidiary of Reserve Bank of India. It was established on
15 July 1978 under Deposit Insurance and Credit Guarantee
Corporation Act, 1961 for the purpose of providing insurance of
deposits and guaranteeing of credit facilities. DICGC insures all bank
deposits, such as saving, fixed, current, Recurring deposit for up to the
limit of Rs. 100,000 of each deposits in a bank.

80.Do we have any insurance on deposits with the banks?

Yes,DICGC.

81.Who is a Bank Customer?

A person who maintains any type of account with a bank is a

bank customer. Consumer Protection Act has a wider definition for
consumer as the one who purchases any service for a fee like
purchasing a demand draft or a pay order. The term c ustomer is
defined differently by Laws, softwares and countries.

82.What is KYC?

 KYC-Know your customer=policy imposed by RBI for verification

of the address &identify the location of customers.(i.e.)CAP & CIP.
  The objective of KYC/AML/CFT combating of financing of
terrorism guidelines is to prevent banks from being used
intentionally or unintentionally, by criminal elements for money
laundering or terrorist financing activities.

 KYC procedures also enable banks to know understand their

customers and their financing dealings better which in turn help
them manage their risks properly.

83.What you understand by suspicious transaction?

A suspicious transaction is one for which there are reasonable

grounds to suspect that the transaction is related to a money
laundering offence or a terrorist activity financing offence.
A suspicious transaction can include one that was attempted.

84.What is PAN?

Permanent Account Number (PAN) is a code that acts as an

identification for Indian nationals, especially those who pay Income
Tax. It is a unique, 10-character alpha-numeric identifier, issued to all
judicial entities identifiable under the Indian Income Tax Act, 1961. It
is issued by the Indian Income Tax Department under the supervision of
the Central Board for Direct Taxes (CBDT) and it also serves as an
important proof of identification.

85.What is Form 60/61?

 If no pan card, bank to obtain from customer

 Form 60 from person other than agricultural income.

 Form 61 from person who has agricultural income and is not in

receipt of any other income.

86.What are the documents classified as “common documents for

ID and Address proof”?

 Aadhar card
  Voter ID

 Driving License

 Passport

87.What is Money Laundering?

When a customer uses banking channels to cover up his suspicious

and unlawful financial activities, it is called money laundering.

88.What are the three stages involved in AML?

Placement is the first stage in money laundering where the cash

proceeds of criminal activity enter into the financial system.

Layering is the second stage in money laundering where attempts

are made to distance the money from its illegal source through layers
of financial transactions.

Integration is the third stage of money laundering. This stage

involves the re-introduction of the illegal proceeds into legitimate
commerce by providing a legitimate-appearing explanation for the
funds.

89.Who is MLRO? Who appoints him? To whom he will report?

Money Laundering Reporting Office of a bank appointed by

the bank’s board and reports to FATP.Money Laundering reporting
officer is responsible for ensuring that transactions arouse suspicious
for any money laundering.

90.What is NFO?

NFO is a New Fund Offer, offered by a Mutual Fund House. It is the

launch of the new mutual fund scheme in the market for the first time.
91. what are the measures taken by RBI to control money
laundering?

 Identification of customer according to risk profile of each

customers under KYC Norms.

 Recognition, handling and disclosure of suspicious transaction.

 Cash Transaction Report(CTR)

 Maintenance of Records

 Audit of Transactions

92. What is IPO?

Initial Public Offering (IPO): An event where a company sells

its shares to the public for the first time. The company can be referred
to as an IPO for a period of time after the event.

93.What is Banking Ombudsman?

A one man official for Grievances Redressal forum set up by the

Government to investigate an individual complaint filed by the public
against public authorities.An ombudsman who resolve regarding
banking customer grievances is called banking ombudsman.

94.What is SEBI Ombudsman?

SEBI Ombudsman is to resolve complaints regarding capital

market services.

95.What is Insurance Ombudsman?

Insurance Ombudsman is to resolve complaints regarding

Insurance services.

96.Who are all classified under Low/Medium/High risk customers?

Low risk customers: Government departments and government

owned companies and regulators and statuary bodies.
 Medium risk customers: Non-resident customers,HNI’s,
Trust,Charitable institutions,Firms with sleeping partners,NGO’s.

High risk customers: Non face-to-face customers and customers

with dubious reputation.

97.What is the difference between Simple and Compound interest?

BASIS FOR COMPARISON SIMPLE INTEREST COMPOUND INTEREST
Meaning Simple Interest Compound Interest
refers to an interest refers to an interest
that is calculated as which is calculated as
a percentage of the a percentage of
principal amount. principal and accrued
interest.
Return Less Comparatively high
Principal Constant Goes on Changing
during the entire
borrowing period.
Growth Remains uniform Increases rapidly
Interest charged on Principal Principal+Accumulated
Interest

98.What is Net Present Value(NPV)?

Net Present Value(NPV) is the difference between the present

value of cash inflows and present value of cash outflows.NPV is used in
capital budgeting to analyze the profitability of a projected investment
or project.

99.What you understand by IRR?

Internal Rate of Return (IRR) is the interest rate at which

the net present value of all the cash flows(both positive and negative)
from a project or investment equal zero.IRR is used to evaluate the
attractiveness of a project or investment.
100. Define EMI?

Equated monthly installments , a combination of Principle and

interest payable every month on loan accounts.

101.What is Subvention?

Subvention refers to a grant of money in aid or support,mostly

by the government(called subsidy).Also amount paid by a dealer or
manufacture of cars to customers inorder to boost sales.

102.What is Moratorium?

Moratorium: R.B.I. imposes moratorium on operations of a

bank; if the affairs of the bank are not conducted as per banking
norms. After moratorium R.B.I. and Government explore the options of
safeguarding the interests of depositors by way of change in
management, amalgamation or take over or by other means.

103.What is Accounting?

It is a systematic process of identifying, recording, measuring,

classifying, verifying, summarizing, interpreting and communicating
financial information.It reveals profit or loss for a given period and the
value and nature of a firm’s assets, liabilities and owner’s equity.

104. What are the golden rules in accountancy?

 Debit what comes in Credit what goes out.

 Debit the receiver and credit the giver.

 Debit all expenses and credit all income.

105.What is Balance sheet?

Balance Sheet : A financial statement showing the nature and

amount of a company's assets, liabilities and shareholders' equity.
106.What is Profit & Loss account?

An income statement or profit and loss account is one of the

financial statements of a company and shows the company’s revenues
and expenses during a particular period.It indicates how the revenues
are transformed into the net income.

107.In Bank balance sheet,what are all classified under Assets and
Liabilities?

Classification of Assets:

 Fixed Assets

 Investments

 Current Assets

 Fictitious Assets

Classification of Liabilities:

 Fixed Liabilities

 Current Liabilities

 Contingent Liabilities

108.What is Depreciation?List types of depreciation and explain.

Depreciation is defined as the reduction of recorded cost of a

fixed asset in a systematic manner until the value of the asset becomes
zero or negligible.

TYPES:

Straight-line depreciation method:

This is the simplest method of all. It involves simple allocation of an

even rate of depreciation every year over the useful life of the asset.
Unit of Production method:

This is a two-step process, unlike straight line method. Here,equal

expenses rates are assigned to each unit produced.This assignment
makes the method very useful in assembly for production lines.Hence,
the calculation is based on output capability of the asset rather than
the number of years.

Double declining method:

This is an accelerated depreciation method.As the name suggests, it

counts expense twice as much as the book value of the asset every year.

109.What is Fixed Asset? Give some examples?

The term fixed assets generally refers to th e long-term

assets,tangible assets used in a business that are classified as
property,plant and equipment.Examples of Fixed Assets are
land,buildings, manufacturing equipment, office equipment,furniture
and vehicles.

110.What is Current asset? Give some Examples?

Current assets include cash and cash equivalents, accounts

receivable,inventory, marketable securities,prepaid expenses and other
liquid assets that can be readily converted to cash.

111.What is Long term Liability? Give Some Examples?

 Long-term liabilities, or non-current liabilities,

are liabilities that are due beyond a year or the normal operation
period of the company.The normal operation period is the amount
of time it takes for a company to turn inventory into cash.

 Examples of long-term liabilities are bonds payable, long-term

loans, capital leases, pension liabilities, post -retirement
healthcare liabilities, deferred compensation, deferred revenues,
deferred income taxes, and derivative liabilities.
112. What is Current Liability?Give Some Examples?

Current Liabilities are a company’s debts or obligations that are due

within one year, appearing on the company’s balance sheet and include
short term debt,account payable,accrued liabilities and other
debts.Essentially, these are bills that are due to creditors and supplie rs
within a short period of time.

113.What is insurable interest?

Insurable interest is defined as the reasonable concern of a person

to obtain insurance for any individual or property against unforeseen
events such as death, losses, etc.

114.List different types of insurance products under life

insurance?

 Endowment policy

 Term Insurance

 Money or cash plans

 Whole life insurance

 Children’s policies

 Annuity plans

115.List different types of insurance products under general

insurance?

 Health insurance

 Travel insurance

 Motor insurance

 Home insurance

 Marine insurance
  Commercial insurance

116.What is Utmost Good Faith?

The doctrine of Utmost Good Faith provides general assurance that

the parties involved in a transaction are being truthful and acting in
an ethical way.

117.What is Subrogation?

Subrogation(meaning-avoiding double claim)is a term denoting a

legal right reserved by the most insurance carriers. Subrogation is the
right for an insurer to legally pursue a third party that caused an
insurance loss to the insured.This is done as a means of recovering the
amount of the claim paid by the insurance carrier to the insured for the
loss.

118.What is Contribution?

The Principle holding that two or more insurers each liable for a
covered loss should participate in the payment of that loss.Having paid
its share of a loss, an insurer may be entitled to equitable
contribution.i.e,a legal right to recover part of the payment from
another insurer whose policy was also applicable.

119. Difference between Primary and Secondary market

BASIS FOR COMPARISON PRIMARY MARKET SECONDARY MARKET
Meaning The market place for The place where
new shares is called formerly issued
primary market. securities are traded
is known as Secondary
Market.
Type of Purchasing Direct Indirect
Buying and Selling Company and Investors
between Investors
Price Fixed price Fluctuates, depends on
the demand and
supply force
120.Differentiate fixed price and book building process in IPO?

FEATURES FIXED PRICE PROCESS BOOK BUILDING

Pricing Price at which the
securities are
offered/allotted is known
in advance to the investor.
Demand Demand for the securities
offered is known only after
the closure of the issue.
Payment Payment if made at the
time of subscription
wherein refund is given
after allocation.
PROCESS
Price at which securities
will be offered/allotted
is not known in advance
to the investor. Only an
indicative price range is
known.
Demand for the
securities offered can be
known everyday as the
book is built.
Payment only after
allocation

121.What is Sensex?

The Full Form of Sensex is Sensitive Index.People are happy when

the sensex goes up and upset when it goes down.Sensex is the stock
market index of the Bombay Stock Exchange or BSE, it is also called
BSE Sensex.

122.What is meant by NIFTY?

National Stock Exchange Index for Top Fifty shares.The full form of
NIFTY is ‘National Stock Exchange Fifty’.It is known as NIFTY 50 or
CNX NIFTY .

123.What is market Capitalization?

The product of the number of the company’s outstanding ordinary

shares and the market price of each share.
124.What is Mutual Fund?

Mutual funds are an investment scheme that pools money from many
different investors to invest in stocks, bonds or other securities and
distribute surplusses to all from the return from investment.

125.Advantages of MF?

 Investing in Mutual Funds is easy.

 Mutual Funds offer professional management

 Mutual Funds are Diversified Investments

 Investment costs are low for Mutual Funds

 Investors can buy many different types of Mutual Funds

 Mutual Funds are versatile enough to be used by all types of

investors.

126.Explain

a) Open-end (Mutual) Fund: There is no limit to the number of shares

the fund can issue. The fund issues new shares of stock and fills the
purchase order with those new shares. Investors buy their shares from,
and sell them back to, the mutual fund itself. The share prices are
determined by their net asset value.

b) Closed-end (Mutual) Fund: A fund with a fixed number of shares

issued, and all trading is done between investors in the open market.
The share prices are determined by market prices instead of their net
asset value.

c) Interval Funds:These funds combine the features of both open-

ended and close-ended funds wherein the fund is close-ended for the
first couple of years and open-ended thereafter.

d) Aggressive Growth Fund: An aggressive growth fund targets

maximum capital appreciation and thus may adopt speculative
investment strategies.It tends to be more volatile and riskier because it
invests in slightly lower rated company’s stocks and also less
researched or speculative stocks.

e) Growth Fund: This fund invests in equities of growth companies

only,that is the companies which have the potential to grow at higher
rate in future.Further, it targets capital appreciation over three to five
years horizon and invests in companies with high earnings growth.A
growth fund is less volatile than aggressive growth funds because
investments are generally in proven companies.

f) Sector Fund: Invest in one industry or sector of the market.For

Example, Technology Fund, Pharma Fund and Banking Fund.These are
less-diversified and hence have higher risk than the diversified funds.

g) Thematic Fund(Specialty fund):It has a narrow portfolio

orientation and invests in companies that meet pre-defined criteria.For
Example, Infrastructure Fund or Association of Southeast Asian
Nations(ASEAN) fund.

h) Equity Linked Saving Scheme(ELSS):Investment in these schemes

entitles the investor an income tax deduction under section 80C.These
are open-ended funds but investment in these schemes gets locked -in
for a period of three years.

i) IndexFund: They track the performance of specific stock market

index like BSE Sensex or NSE Nifty .Its portfolio replicates a selected
index as it invests in stock in the same proportion as that of Index.
Index funds exposes investors to only market risk as it is a diversified
portfolio.

j) Value Fund: Value funds try to seek out fundamentally sound

companies whose shares are currently underpriced in the market.These
funds add those shares to their portfolio that are selling at low price -
earnings ratios,low market to book value ratios and are believed to be
undervalued compared to their true potential.It is volatile in short
term but has least risk in the long run.
K) Debt Fund: Debt funds invest primarly in debt(loan)securities or
fixed income securities, such as corporate debentures,debt instruments
issued by government and various corporate bodies,banks and financial
institutions. The primary objective of debt funds is a regular income.In
other words, these schemes attempt to provide a regular income to
their investors.Such funds are less risky as compared to equity growth
funds.

Two Important debt funds are

 Focused debt funds

 Gilt funds

l) Money Market Fund: Money Market Funds invest in short-term debt

securities of less than one year duration. Money Market is a virtual
market wherein Banks/FIs lend and borrow short-term funds.Their
primary objective is liquidity.
Various types of money market instruments are

 Call money

 Treasury Bills

 Commercial Papers

 Certificate of Deposit

m) Balanced fund: These comprise of debt, convertible securities and

equity shares in more or less equal proportion,though it need not
necessarily be in equal proportions.They have an objective of income
with moderate capital appreciation and preservation.To avail tax
benefits minimum of 65% is generally invested in Equities.

n) Exchange-Traded Funds(ETFs): An equity-based ETF would invest

in a basket of stocks that reflects the composition of an index , say Nifty
or Sensex.These funds are freely traded on the stock exchange and
derive value from the underlying asset i.e,stock.Investors can buy or
sell units of these schemes, like any other stock listed on the exchange
through brokers.

o) Funds of Funds(FOFs): FoFs is a mutual fund that invests in other

mutual funds and is considered like a debt schemes for purposes of
securities transaction tax. The investments of FOFs is other Mutual
Fund schemes,therefore STT is not levied on investments.This allows
fund managers to rebalance portfolio freely.

127.What are SIP/SWP/STP?

Systematic Investment plan where as investor invest a fixed

money every month in a Mutual Fund Scheme.It helps to invert a small
amount of money in Mutual Fund scheme of investor’s choice.

Systematic Transfer plan, it is a combination of SWITCH & SIP it

invert lumpsumamount in one mutual fund scheme and regularly
transfer particular amount switched to any scheme at particular date.

Systematic Withdrawal plan,it is used for periodic withdrawal

from mutual fund.You could specify date when you require the money
and a particular money is redeemed every month from scheme
mentioned by you for the specific period.

128.Who is Depository/Depository Participant?

Depository is an arrangement where in securities. Such as

shares,debentures,bonds ,Government securities and insurance policies
are kept in electronic form.It is similar to bank where deposits are
kept.Two depositories in India are

 National Securities Depository Limited(NSDL)

 Central Depository for Securities Limited(CDSL)

Depository Participant(DP): Who maintains the Demat accounts

on behalf of depository.DP is an asset of the depository.
129. What are the different types of freezing?

 Debit only

 Complete freezing account

 Freezing of particular company

130.What is the difference between Transposition and

Transmission?
BASIS OF COMPARISON TRANSPOSITION TRANSMISSION
Meaning Transposition refers Transmission of
to the transfer of title shares means the
to shares, voluntarily, transfer of title to
by one party to shares by the
another. operation of law.
Affected by Deliberate act of Insolvency, death,
parties. inheritance or lunacy
of the member.
Initiated by Transferor and Legal heir or receiver
transferee
Stamp duty Payable on the market No need to pay.
value of shares.
131.Differentiate CAP and CIP?

Customer Acceptance Policy(CAP): Any customer is allowed to

open and operate the account on the CAP adopted by the bank
considering the different categories of risks involved. Customers are
grouped into Low, Medium, High and Higher category as per set of
procedures.

Customer Identification Process(CIP): Customers are identified

based on various documents collected.Customers are required to
provide documents to prove their identity and address.

132.What are the variants of derivatives?

A contract or security that derives its value from other products

called the underlying securities (or) assets[like equit y,
commodity,forex,interest rate] .Four most common examples
of derivative instruments are Forwards, Futures, Options and Swaps.

133.Explain Hedgers/Speculators/Arbitrageurs?

Hedgers:

An investor who takes steps to reduce the risk of an investment by

making an offsetting investment. There are a large number of hedging
strategies that a hedger can use. Hedgers may reduce risk, but in doing
so they also reduce their profit potential.

Speculators:

A speculator is a person who trades derivatives, commodities, bonds,

equities or currencies with a higher than average risk in return for a
higher-than-average profit potential. Speculators take large risks,
especially with respect to anticipating future price movements, in the
hope of making quick, large gains.

Speculators are typically sophisticated risk-taking investors with

expertise in the markets in which they are trading; they usually use
highly leveraged investments, such as futures and options.

Arbitrageurs

An arbitrageur is a type of investor who attempts to profit from price

inefficiencies in the market by making simultaneous trades that offset
each other and capturing risk-free profits.

134.Explain Long term capital gain and short term capital gain?

Long term Capital gains, if the assets like shares and securities, are
held by the assessee for a period exceeding 12 months or 36 months

A short-term gain is a capital gain realized by the sale or exchange of

a capital asset that has been held for exactly one year or less.
135.Differentiate Fiscal Policy and Monetary policy?

Monetary policy is a term used to refer to the actions of central

banks to achieve macroeconomic policy objectives such as price
stability, full employment, and stableeconomic growth. Fiscal policy is
a broad term used to refer to the tax and spending policies of the
central government. However, both monetary and fiscal policy may be
used to influence the performance of the economy in the short run .

136.What is crossing of a cheque?Advantages?

Crossing refers to drawing two parallel lines across the face of the
cheque. A crossed cheque cannot be paid in cash across the counter,
and is to be paid through a bank either by transfer, collection or
clearing. A general crossing means that cheque can be paid through
any bank and a special crossing, where the name of a bank is indicated
on the cheque, can be paid only through the named bank.

137.What is Endorsement?Explain full and blank endorsement?

 Endorsement: When a Negotiable Instrument contains, on the

back of the instrument an endorsement, signed by the holder or
payee of an order instrument, transferring the title to the other
person, it is called endorsement.

 Endorsement in Full: Where the name of the endorsee or

transferee appears on the instrument while making endorsement.

 Blank Endorsement :Open endorsement that carries only the

signature of the endorser and does not specify in whose favor it is
made (who is the new endorsee)

138.List out the reasons for returning cheques?

 Funds insufficient

 Exceeds arrangement

 Drawer’s signature incomplete

  Drawer’s signature differs

 Drawer’s signature required

 Alterations require drawer’s authentication (Under CTS only

alteration in date is permitted, in case of any alteration, the
cheque will be returned)

 Payment stopped by drawer

139. What is local clearing?

Process of collection of local city cheques and other instruments

in a centralised location.

140. What are the alternate channels available?

 ATM

 Call center

 Mobile banking

 Online banking

 Internet banking

 Direct selling assets

 Door step banking

 Relationship manager

141. What is stale cheques?

A cheque which a bank will not accept exchange for money or

payment because it was written more than a certain number of months
ago.

(OR)
 Stale cheque is a cheque which is not presented to the drawee
bank(Paying bank) within a time of 3 months from the date of issuance .

142. Difference between safe deposit locker and safe custody.

Safe deposit locker:

 Control of the articles is with the customer

 Exclusive locker allotted for his use and self operation

 Annual rent payable by the customer

Safe Custody:

 The article are under the exclusive custody of the banker and the
same is kept in the banks fire-proof safe a vault.

 One time facility and changes also one time.

143. Differentiate on-sight / off-sight/worksite/mobile ATM/drive-

in ATM.

On-sight ATM: Installed at the branch premises.

Off-sight ATM: Installed at other places i.e. other than branches.

Worksite: Any offices, court, colleges, etc.,

Mobile ATM: A van with ATM machines operates in a particular

place/village for particular time.

Drive-in ATM: Accessible to VIP to withdraw money by using wave

card and parking the car nearby ATM.

144. What is Mutilation:

If a cheque is torn two or more pieces such cheque is

mutilated cheques. The bill will not make payment against mutilated
cheque without getting a confirmation of the drawer.
145.What is Gold deposits scheme?

Union government had given its approval to gold deposit

and monetization scheme in order to mobilize a part of an estimated
20,000 tonnesof precious metal lying idle with households and
institutions into the banking service. This is to reduce import of golds .

146. What is Mobile wallet?

It is the mobile based virtual wallet, where one can pre -load
a certain amount in your account created with the mobile wallet
service provider and spent it at onine and offline office merchants
listed with the mobile wallet service provider.

147. Monetory policy statement 2017 to 2018 – December 6, 2017

 Indicates a loss of momentum in global trade due to declining

export orders

 Crude oil prices touched two and a half , a year high in Novemb er
on account of OPEC efforts to rebalance the market

 CPI inflation excluding food and fuel, which increase from only in
September remained steady in October.

 Inflation to rise and range between 4.2 to 4.6% Q2 and in Q3 and

Q4 to range 4.3 to 4.7%

148. What is LIBOR?

London Inter Bank Offering Rate. Bank of England determines

interest rates i.e. the rate at which it lends to banker and other
financial institute. The London Interbank Offered Rate (or LIBOR) is a
daily reference rate based on the interest rates at which banks offer to
lend unsecured funds to other banks in the London wholesale money
market (or interbank market). The LIBOR rate is published daily by the
British Banker’s Association and will be slightly higher than the
London Interbank Bid Rate (LIBID), the rate at which banks are
prepared to accept deposits.

149. What is Wilful Default?

 Wilful default would be supposed to have happened if any of the

subsequent events observed.

 Deliberate non-payment of the dues regardless of sufficient can

flow and good network.

 Siphoning of funds to the disadvantage of the defaulting unit.

 Assets financed either not been purchased or assets have been

sold and proceeds have been misutilised the funds.

 Disposal or removal of securities without bank’s disadvantages.

150.What is Bitcoins/Cryptocurrencies?

It is a new currency that was created in 2009 by an unk nown

person using the alia satoshi Nakamoto.Transactions are made with no
middle men-meaning no banks.It is used to buy merchandise
anonymously.It is not tied to any country or subject to regulation.There
are no credit card fees.It is stored in a digital wallet,which exists either
in the cloud or on a user’s computer.The wallet is a kind of virtual bank
account that allows users to send or receive bitcoins ,pay for goods or
save their money through their wallet IDs.

151.What is IBC?

Insolvancy and bankruptcy code, 2016 provides for a specialized

forum to oversee all insolvency and liquidation proceedingsfor
individuals, SMEs and corporate. It empowers all classes of creditors(S
or WS) to trigger a resolution process in case of non payment of valid
claim.
152. What is MCLR?

Marginal Cost of Lending Rate :

Banks have to prepare marginal cost of funds based

lending rate, MCLR which will be the internal benchmark lending rated.
Based on MCLR, interest rate for different types of customers will be
fixed in accordance with their riskiness. Banks have to set 5 benchmark
rates for different tenure of time periods ranging from overnight rates
to all year.

153. What is double entry book keeping?

Book Keeping:

Book keeping is primarily concerned with the design of the

system of records,the preparations of reports based on the recorded
data and interpretation of the reports.

Double entry Book keeping:

Every business transactions has a two fold effect and that

it affects two accounts in opposite directions and if a complete record
were to be made of each such transactions, it would be necessary to
debit one account and credit another account. It is the recording of the
two fold effect of every transaction(Debit/credit) that has given rise to
the term double entry.

154.What is Equity shares?

A stock or any other security representing an ownership

interest.

(or)

It is a main source of finance for any company giving

investors right to vote, share profits and claim on assets.
155. what is Prompt Corrective action by RBI?

 RBI introduces PCA when the banks financial conditions worsen

below certain limits.

Example: CRAR, Net NPA and Return on assets.

 RBI has taken some important measures and tools to put several
impositions on the banks from lending to the distribution of
dividends etc. (Some banks – Central Bank of India, UCO Bank,
Dena Bank, IDBI, BOM, IOB).

 Government to bear Merchants Discount Rate(MDR) ch arges on

transactions upto Rs.2000/- made through debit cards, BHIM UPI
or Aadhar enabled payment systems(AEPS) to promote digital
transactions. It will be for two years w.e.f 01.01.2018 by
reimbursing the same to the banks.

 Small merchants (Turnover upto 20lakhs) will pay a maximum

MDR of 0.40% of bill value and larger merchants(>20lakhs) will
shell out 0.90%. RBI has also set monetary cap at Rs.200/ - per bill
for small merchants and Rs.1000/- for large ones.

156. What is Merchant Discount Rate?

MDR is charge or fee imposed on merchants by banks for

accepting payments from their customers in credit and debit cards
everytime card is used for payments(swiping) in their stores. MDR
compensates bank issuing card, banks which puts up swip ing
machine(POS Terminal) and network providers such as VISA or Master
card for their services.

157. What is BHIM UPI?

Bharath Interface for Money is a mobile App develop

by NPCI based on the UPI inaugurated by PM on 30.12.2016. It is
intended to facilitate e-payments directly through banks as part of the
2016 indian bank note demonetisation and drive towards cashless
transactions. It is supported by 7 regional languages.

158. What is BHIM?

BHIM is digital payment solution App, for easy and quick

transactions based on UPI from the NPCI. One can easily make direct
bank to bank payments instantly and collect money just by using
mobile number or payment address. It allows person to person money
transfers, scheduled money collections and transactions to be done
through a smart phone.

159.Differentiate Wallet and BHIM:

Wallet
Rely on phone’s locking systems as
the security.
Don’t ask any pin or passwords.
Anyone can use Wallet by merely
unlocking the screen.
BHIM
Has it’s own passwords.
One needs to enter the password to
access the app.
The Payment gateway is blocked
after 3 wrong tries.

160. Define Pockets?

It is a VISA powered e-wallet that customer of any bank can

use to recharge mobile, send money, shop anywhere, pay bills and much
more. Pockets also comes with a physical shopping card which can be
used to shop on any website or retail stores.

161. RBI allowed NRI to invest in Chit funds to encourage flow of

capital into the country.

162. Five associates and the Bharathiyan Mahila Bank officially

merged with country’s largest lender State Baank of India.

163. RBI will be seemed to regulate peer to peer lending firms as

NBFCs – Govt Notification.
  Peer to Peer Lending is a form of crowd funding used to
raise loans which are paid back with interest. It enables
individuals to borrow and lend money without use of an
official financial institution as an intermediary.

164. What is Margin?

The amount of contribution by the borrower.

165. What is Capital?

Capital is a cushion or shock absorber required to absorb

potential losses in future.

166. Define Nomination?

NOMINATION for deposits is compulsory as per RBI guidelines

under section 4 za of banking regulation act 1949,

 Form DA 1 –nomination

 Form DA 2- Change in nomination.

 Form DA 3 – Re nomination.

167. What is Inflation?

The overall general upward price movement of goods and

services in an economy usually measured by the consumer price index
and the product price index.

168. What is GDP?

Gross domestic product. The total market value of all final

goods and services produced in a country in a given year, equal to total
consumer, investment and government spending plus the value of
exports minus the value of imports.

169. A cheque is a bill of exchange drawn on a specified banker and

not expressed to be payable otherwise than a demand and it includes
the electronic image of a truncated cheque in electronic form (sec 5 of
B. R Act).

170.Capital Adequacy Ratio (CAR) also known as capital to risk

weighted assets ratio (CRAR) is the ratio of a bank’s capital to its risks.
Banks CAR is to ensure that it can absorb a reasonable amount of loss
and complies with statutory capital requirements.

CAR= Tier 1 capital+Tier 2 capital /Risk weighted assets.

171. 3 in 1 account is a joint offering by banks and securities limited

that integrates the Trading account, Bank and demat account to sell
and buy securities without the involvement of brokers.

172. What is negotiable instruments.

As per negotiable instruments act 1881, a cheque, a promissory

notes and bills of exchange are called negotiable instruments.

173. An NPA (non performing assets) is an advance, where interest

and/or installment of principal remains overdue for a period of more
than 90 days in respect of a term loan and the account remains out of
order for a period of 90 days in respect of an overdraft(cash credit
accounts).

An account should be treated as ‘out of order’ if the outstanding

balance remains continuously in excess of the sanctioned limit/drawing
power. Even though accounts are within the limits/ drawing power
but there are no credits continuously for 90 days.

174. SARFAESI ACT, 2002

The securitization and reconstruction of financial assets

and enforcement of security interest act, 2002 allowed the banks to
take possession of assets of defaulting borrowers and charged to the
bank without the legal process.
175. What is the effect of SLR? (Objectives)

 to restrict the expansion of banks credit

 to increase the banks investment in approved securities, and

 to ensure solvency of banks.

176. What is retail banking?

Retail banking means doing banking business with individual and

small business customers.

177. What is a Systematic Investment Plan and how does it

operate?

A systematic investment plan is one where an investor contributes

a fixed amount every month for purchase of MF units and at the
prevailing NAV the units are credited to his account.

178. Who can be called a Non Resident Indian (NRI)?

A non-resident Indian (NRI) is a person resident outside India

who is an Indian citizen who stays abroad for employment / carryin g
on business or vocation outside India or stays abroad for an uncertain
period.

179. Who is a Foreign Institutional Investor (FII)?

An FII means an institution established or incorporated outside

India, which proposes to make investment in Indian securities, and is
registered with SEBI.

180. What is an Asset Management Company?

An AMC is involved in the daily administration and also acts as

investment advisor for the Mutual fund.They are the agent of the
Depository.
181.Balance Sheet : A financial statement showing the nature and
amount of a company's assets, liabilities and shareholders' equity.

182.Dematerialisation is the process by which physical certificates of

an investor are converted to an equivalent number of securities in
electronic form and credited in the investor's DEMAT account with his
DP.

183 . Whether banks can accept interest free deposits?

Banks cannot accept interest free deposits other than in current

account.

184. Anytime Banking: With introduction of ATMs, Tele-Banking and

internet banking, customers can conduct their business anytime of the
day and night. The 'Banking Hours' is not a constraint for transacting
banking business.

185.Anywhere Banking: Refers to banking not only by ATMs, Tele-

Banking and internet banking, but also to core banking solutions
brought in by banks where customer can deposit his money, cheques
and also withdraw money from any branch connected with the system.
All major banks in India have brought in core bankin g in their
operations to make banking truly anywhere banking.

186.National Automated Clearing House (NACH): A computerized

facility used by member depository institutions to electronically
combine, sort, and distribute inter-bank credits and debits. ACHs
process electronic transfers of government securities and provided
customer services, such as direct deposit of customers' salaries and
government benefit payments (i.e., social security, welfare, and
veterans' entitlements), and pre authorized transfers.

187. Cheque Truncation: Cheque truncation truncates or stops the flow

of physical cheques through the banking system. Generally truncation
takes place at the collecting branch, which sends the electronic image of
the cheques to the paying branch through the clearing house and stores
the paper cheques with it.

188. E-Banking : E-Banking or electronic banking is a form of banking

where funds are transferred through exchange of electronic signals
between banks and financial institution and customers ATMs, Credit
Cards, Debit Cards, International Cards, Internet Banking and new fund
transfer devices like SWIFT, RTGS belong to this category.

189.NEFT - (National Electronic Fund Transfer): NEFT is a device to

facilitate automatic transmission and processing of messages as well as
funds from one bank branch to another bank branch and even from one
branch of a bank to a branch of another bank.NEFT allows transfer of
funds electronically with debit and credit to relative accounts.

190. Insider Trading: The illegal use of non-public information about a

company to make profitable securities transactions by an
employee/staff/executives.

191. Liquidity: The ability to convert an investment into cash quickly and
with little or no loss in value.

192.Listing: Quotation of the Initial Public Offering company’s shares on

the stock exchange for public trading.

193.Marginal Standing Facility Rate: MSF scheme has become effective

from 09th May, 2011 launched by the RBI. Under this scheme, Banks will
be able to borrow upto 1% of their respective Net Demand and Time
Liabilities. The rate of interest on the amount accessed from this facility
will be 100 basis points (i.e. 1%) above the repo rate. This scheme is
likely to reduce volatility in the overnight rates and improve monetary
transmission.

Present rate is 6.25%.

194.Material Alteration: Alteration in an instrument so as to alter the

character of an instrument for example when date, amount, name of the
payee are altered or making a cheque payable to bearer from an order
one or opening the crossing on a cheque.

195. Net Asset Value: The underlying value of a share of stock in a

particular mutual fund; also used with preferred stock.The true value of
an unit.

196.Non-Fund Based Limits: Non-Fund Based Limits are those type of

limits where banker does not part with the funds but may have to part
with funds in case of default by the borrowers, like guarantees, letter of
credit and acceptance facility.

197. Post-Dated Cheque: A Cheque which bears the date which is

subsequent to the date when it is drawn. For example, a cheque drawn
on 8th of February, 2007 bears the date of 12th February, 2007.

198. Provisioning: Provisioning is made for the likely loss in the profit
and loss account while finalizing accounts of banks. All banks are
supposed to make assets classification and make appropriate provisions
for likely losses in their balance sheets.

199. Universal Banking : When Banks and Financial Institutions are

allowed to undertake all types of activities related to banking like
acceptance of deposits, granting of advances, investment, issue of
credit cards, project finance, venture capital finance, foreign exchange
business, insurance etc. it is called Universal Banking.

200. When will the CTS begin ? :

 RBI has originally decided that CTS will be effective from 1st
January 2013, but then it was announced that it will be effective
from 1st April, 2013. However, as per RBI guidelines dated 18th
March, 2013, now this deadlines has been revised and it will be
effective from 1st August, 2013 (i.e. non CTS cheques will be valid
till 31st July, 2013).
  RBI will review the deadline in June 2013. “Cheque issuing banks
shall make all efforts to withdraw the non-CTS-2010 Standard
cheques in circulation before the extended timeline of 31 July
2013 by creating awareness among customers through SMS
alerts, letters, display boards in branches/ATMs, log-on message
in internet banking, notification on the web-site etc,” RBI said.

201. What are the features of cheques issued under CTS ? :

 Cheque printer details: This is printed on the extreme left hand

side of the cheque. The printer details along with the words ‘CTS-
2010’ is mentioned along the area where you tear off the leaf from
the cheque book.

 Rupee symbol: The new symbol of the Indian rupee is printed

beside the area where the amount in figures needs to be written.

 Details of the bank and its logo: The bank details and its logo are
printed on the face of the cheque. However, it is printed in invisible
ink.

 Signature space indicator: The words ‘please sign above’ are

mentioned indicating the space where you will need to sign the
cheque.

 VOID pantograph: This is a wavelike design, which is visible to the

naked eye and seen below the area where the account number is
printed.

202.What are the steps taken by RBI to support financial

inclusion?

 RBI set up the Khan Commission in 2004 to look into financ ial
inclusion and the recommendations of the commission were
incorporated into the mid-term review of the policy (2005–06) and
urged banks to review their existing practices to align them with
the objective of financial inclusion. RBI also exhorted the banks
 and stressed the need to make available a basic banking 'no frills'
account either with 'NIL' or very minimum balances as well as
charges that would make such accounts accessible to vast sections
of the population Of the many schemes and programm es pushed
forward by RBI the following need special mention.

 Initiation of no-frills account – These accounts provide basic

facilities of deposit and withdrawal to accountholders makes
banking affordable by cutting down on extra frills that are no use
for the lower section of the society. These accounts are expected to
provide a low-cost mode to access bank accounts. RBI also eased
KYC (Know Your customer) norms for opening of such accounts.

 Banking service reaches homes through business correspondents –

The banking systems have started to adopt the business
correspondent mechanism to facilitate banking services in those
areas where banks are unable to open brick and mortar branches
for cost considerations. Business Correspondents provide
affordability and easy accessibility to this unbanked population.
Armed with suitable technology, the business correspondents help
in taking the banks to the doorsteps of rural households.

 EBT – Electronic Benefits Transfer – To plug the leakages that are

present in transfer of payments through the various levels of
bureaucracy, government has begun the procedure of transferring
payment directly to accounts of the beneficiaries. This “human -
less” transfer of payment is expected to provide better benefits and
relief to the beneficiaries while reducing government’s cost of
transfer and monitoring. Once the benefits starts to accrue to the
masses, those who remain unbanked shall start looking to enter
the formal financial sector.
203. What is a bank ? Define a Bank ?

In simple words, we can say that Bank is a financial institution that

undertakes the banking activity ie.it accepts deposits and then lends the
same to earn certain profit.

204. Can A Minor Draw or Endorse or Negotiate a Cheque :

Yes but ..... In terms of Section 26 of NI Act, a minor can draw or

endorse or negotiate a cheque or a bill but he cannot be held liable on
such cheque or bill. However, such bill will be valid and other parties
will be liable in their respective capacities.

205.Can A Minor Appoint A Nominee ?

No, he can not appoint a nominee, but a minor can be appointed as a

nominee.

206. How much of sales and operations activities would you prefer?

Sir I am ready to suit with bank’s policy and requirements.

207. After joining, if the organization moves you to a new location

where you have never been before will you accept it?

Yes, I will accept &ready to go anyplace.

208. How do you differentiate yourself from others?

I have strong listening power &always try to think differently w hich will
differentiate myself with others.

209. Which category does ULIP comes into, insurance or mutual fund?

ULIP comes under insurance.

210. If we ask you to get a business of premium 30k,how will you get
it?

I will get a business by selling a LIFE INSURANCE to the customers in the

age group between 25yrs to 35yrs old by setting annual premium (either
2 or 3 person)

211. Are you open to move to a different department within the

organization?

Yes as per Bank’s requirement.

212. What is the slogan used by our company while advertising?

HDFC-We understand your world

HSBC-World’s local bank

ICICI-Hum Haina , WE CARE

KVB-Smart way to bank

LVB-The changing face of prosperity

INDUSIND-We make you feel richer

AXIS-Everything is the same except name.

213. How will you handle a customer's complaint?

1.acknowledge Politely

2.observing the customer's intently,

3. resolving the problems as soon as possible.

214. what is the difference between a job and a career?

JOB:

Jobs are usually short term thought some people may stick to it
because of security

CAREER:

Career are usually long term & often take up half or more of a
person's life.

215.How would you organize your work and life priorities?

1.I will organize both by making effective planning and schedules.

2. I don't procrastinate the tasks & i will do it immediately.

216. what is the importance of maintaining good relations with

customers?

1. By adding value to our sales.

2. Makes trust.

3. gives referrals.

4. Once trust created acceptance of product will happen.

217. While working at the branch, you will have to sell products to
customers, do you think you can do treat?

yes, I can sell it in my space time and on holidays.

218. If it is a difficult job and you will always be on the move, can
you handle?

Yes, i will manage any difficult job / situations.

219. I want to keep my securities in physical form, how will you
convince me to convert these to DeMat form?

By saying benefits of Demat account such as.

1.Reduces transaction cost.

2.Unlike physical certificates in demat there is no ri sk associated

such as bad delivery or fake securities.

3.transfer in an immediate manner.

4.Eases nomination facility

5.there is no fear of loss of theft and security.

By saying this way i will convince them.

220. What do you understand by Relationship management?

1. It is employed by organization in which a continuous level of

engagement is maintained between organization and customer.

2.It helps to identify potential sources of problem before they come to

a head.

3. On the spot resolution for requirement and doubts.

221. Given a choice, what would you prefer, pure sales or relationship
management?

My choice is both the relationship management and pure sales.

222. How long do you plan to stay with us, if selected?

I will stay with this bank till my retirement life and will be
also part of member in development of the bank.
223. You will have to sell all financial products. Can you handle

it?

Yes sir can you please allow me to act myself as sales person
and I will demonstrate.

224. Recently the RBI has changed the way interest is calculated on
savings a/c and FD what is that charge.

That is from quarterly interest payment to monthly interest

payment method.

225. Why are currency notes not stapled these days?

Because, it defacing the currency notes and reduces the life of

currency notes and as per RBI clean note policy.

226. Where do you see yourself in next 5 years?

I will be in Manager level in this sector within next 5 years of m y joining

the bank.

227. We work for 12 hrs. a day. How will you balance your personal
commitments?

I will balance my personal commitments from remaining

12 hrs and on holidays

228. If you are relocated will you take the offer or reject it?

I will take because, its gives a change to get experience and to

develop sales with different type of customers and different places will
give lot of exposures.
229. If you are not selected, what will be your next step?

I will correct my mistakes what I did during my interview and again

try to develop my career in banking sector till I get a job in a bank.

230. What is clearing?

Process of collection of cheques and other instruments in a

centralized location. Denotes all activities from the time of commitments
is made for a transaction until it is settled

(e.g.) Collection of Cheque .

231. Can you explain in simple words the role of a bank in country’s
economy?

a) Acting as an intermediary

b) Implementation of govt / Rbi

c) Promote capital formation

d) Investment in new enterprises

232. Do you have time constraints?

No, I will always adjust my time as per requirement

233. What is the importance of feedback from customer for an

organization?

a) Gives honest opinion about us so than we can correct

b) Improve relations

c) Positive changes

d) Get referrals.
234. If a customer wants to talks and simply talk, what will you do or
say?

I will find time to ask customers’ requirements without hurting

them.

235. I have two profile sales and operation, which one would you
choose? Why?

Both because we need sales to increase profit and operation to

fulfill and satisfy the customers need and queries respectively.

236. How will you sell a life insurance cover to a t wo year old
executive?

By saying benefit in favor of employees and also of executive need

for covering his risk by high lighting the premium cost which is related
to age.

237. Are you comfortable in traveling?

Yes I like it , because it gives me lot of information and knowledge.

238. Can you narrate an incident where you have shown positive
attitude?

All said that I don’t get high marks in +2, but my positive attitude
and hard work I made as success in +2 with 82%.