1. Why do you want to join the banking sector?

This question seems directed

at personal aspirations. However, I am an AI and don't have personal
motivations.
2. Difference between Cheque and Demand Draft: A cheque is a negotiable
instrument issued by an account holder to make payments to a specific
individual or entity. A demand draft (DD) is a prepaid instrument issued by a
bank, generally used for making payments, remittances, or transferring funds.
3. Non-Banking Financial Company (NBFC): An NBFC is a financial institution
that provides financial services and products similar to banks but does not
hold a banking license. They cannot accept demand deposits but can offer
loans, investments, and other financial services.
4. Difference between banks & NBFCs: Banks are licensed financial institutions
that can accept demand deposits and offer a wide range of banking services.
NBFCs, while offering similar services, cannot accept demand deposits and
may have different regulatory requirements.
5. Private Banking: Private banking is a personalized banking service offered to
high-net-worth individuals. It provides customized financial and investment
solutions, wealth management, and advisory services.
6. BSBDA (Basic Savings Bank Deposit Account): BSBDA is a type of savings
account offered by banks to promote financial inclusion. These accounts have
minimal KYC requirements and low or zero balance requirements.
7. Basis Points (BPS): Basis points are a unit of measurement commonly used in
finance to describe percentage changes in interest rates, yields, or other
financial indicators. One basis point is equal to one hundredth of a percentage
point (0.01%).
8. KYC (Know Your Customer): KYC is a process by which financial institutions
verify and authenticate the identity of their customers. It's crucial for
preventing fraud, money laundering, and other illegal activities.
9. Sub-prime crisis: The subprime crisis, also known as the global financial crisis
of 2008, was a severe worldwide economic crisis. It was triggered by a collapse
in the subprime mortgage market in the United States, leading to a wider
financial crisis.
10. Base Rate: Base Rate was the minimum interest rate below which banks were
not allowed to lend to their customers. It has been replaced by the Marginal
Cost of Funds Based Lending Rate (MCLR) system in India.
11. SWIFT (Society for Worldwide Interbank Financial Telecommunication):
SWIFT is a messaging network used by financial institutions worldwide to
securely transmit information and instructions for financial transactions.
12. Swabhimaan Yojana: Swabhimaan Yojana was an initiative in India to provide
affordable banking and financial services to rural areas and promote financial
inclusion.
13. NOSTRO and VOSTRO account: NOSTRO account is a bank's account held in
a foreign bank. VOSTRO account is the counterpart account held by a foreign
bank in the local bank.
14. DeMat Account: A Demat Account is an electronic account used to hold and
trade shares and other securities in dematerialized form, eliminating the need
for physical share certificates.
15. RuPay Card: RuPay is an Indian domestic card payment network, similar to
Visa and MasterCard. It enables electronic payments at ATMs, POS terminals,
and online transactions.
16. Foreign Exchange Reserves: Foreign exchange reserves are the foreign
currency deposits and bonds held by a country's central bank. They provide
stability to the country's currency and help in managing exchange rate
fluctuations.
17. Bancassurance: Bancassurance refers to the partnership between banks and
insurance companies to distribute insurance products through bank branches.
18. Money Laundering: Money laundering is the process of disguising the
origins of illegally obtained money, typically by passing it through a complex
sequence of banking transfers or commercial transactions.
19. Difference between Nationalized Bank and Private Bank: Nationalized
banks are owned by the government and operate for public welfare. Private
banks are owned by private individuals or corporations and are profit-
oriented.
20. Non-Performing Assets (NPAs): NPAs are loans or advances that have
stopped generating income for the lender due to non-payment by borrowers
over a certain period.
21. Functions of RBI: The Reserve Bank of India (RBI) performs functions related
to issuing currency, formulating monetary policy, regulating banks, managing
foreign exchange reserves, and promoting financial stability and growth.
22. SEZ (Special Economic Zone): SEZ is a designated geographical area within a
country that offers special economic regulations and incentives to attract
foreign investment and promote exports.
23. SIDBI (Small Industries Development Bank of India): SIDBI is a financial
institution in India that provides credit and financial services to small and
medium-sized enterprises (SMEs).
24. Treasury Bills (TB): Treasury Bills are short-term debt instruments issued by
the government to raise funds for short durations. They are typically issued at
a discount and redeemed at face value.
25. Commercial Paper (CP): Commercial Paper is an unsecured, short-term debt
instrument issued by corporations to raise funds for their short-term financing
needs.
26. CRM (Customer Relationship Management): CRM refers to the strategies
and technologies that companies use to manage interactions and
relationships with their customers.
27. Right to Information Act: The Right to Information Act is a law that
empowers citizens to seek information from government bodies and
institutions.
28. Recession: A recession is a significant decline in economic activity across the
economy, usually characterized by a decrease in GDP, employment, and
consumer spending.
29. Dematerialization: Dematerialization is the process of converting physical
securities, such as shares and bonds, into electronic form to facilitate easier
trading and settlement.
30. Derivative: A derivative is a financial contract whose value is derived from the
performance of an underlying asset, index, or reference rate.
31. LAF (Liquidity Adjustment Facility): LAF is a tool used by the central bank to
manage short-term liquidity in the banking system through repo and reverse
repo operations.
32. Repo Rate: Repo Rate is the rate at which the central bank lends money to
commercial banks, influencing borrowing costs in the economy.
33. Reverse Repo Rate: Reverse Repo Rate is the rate at which banks can lend
money to the central bank, influencing the return on surplus funds.
34. CRR Rate (Cash Reserve Ratio): CRR is the portion of deposits that banks
must keep with the central bank as reserves, affecting the liquidity in the
banking system.
35. Bank Rate: Bank Rate is the rate at which the central bank lends money to
commercial banks for longer durations.
36. PLR (Prime Lending Rate): PLR is the interest rate at which banks lend to
their most creditworthy customers.
37. Bitcoin: Bitcoin is a decentralized digital currency that operates on a peer-to-
peer network, allowing secure and direct transactions without intermediaries.
38. SLR Rate (Statutory Liquidity Ratio): SLR is the percentage of deposits that
banks must maintain in the form of liquid assets like cash, gold, or approved
securities.
39. Deposit Rate: Deposit Rate is the interest rate offered by banks on deposits
made by customers.
40. Fiscal Policy: Fiscal policy refers to the use of government spending, taxation,
and borrowing to influence the economy. It aims to achieve specific economic
goals such as controlling inflation, promoting growth, and maintaining
economic stability.
41. Banking Ombudsman Scheme: The Banking Ombudsman Scheme is an
initiative by the Reserve Bank of India (RBI) to provide a forum for customers
to resolve complaints against banks in a cost-effective and time-bound
manner.
42. Banks Covered Under the Banking Ombudsman Scheme, 2006: All
commercial banks, regional rural banks, and scheduled primary co-operative
banks are covered under the Banking Ombudsman Scheme in India.
43. Inflation: Inflation is the rate at which the general level of prices for goods
and services rises, leading to a decrease in purchasing power. It's typically
measured as an annual percentage increase in the Consumer Price Index (CPI)
or Wholesale Price Index (WPI).
44. Deflation: Deflation is the opposite of inflation and refers to a sustained
decrease in the general price level of goods and services. It can lead to
reduced consumer spending and economic downturns.
45. FII (Foreign Institutional Investor): FII refers to institutional investors from
foreign countries that invest in the financial markets of another country. They
invest in securities such as stocks, bonds, and derivatives.
46. FDI (Foreign Direct Investment): FDI is an investment made by a foreign
entity or individual directly into the economy of another country. It involves
acquiring ownership stakes in businesses or establishing new businesses in the
foreign country.
47. IPO (Initial Public Offering): An IPO is the first sale of shares of a company
to the public. It allows the company to raise capital by offering ownership
shares to investors.
48. GDP (Gross Domestic Product): GDP is the total value of all goods and
services produced within a country's borders in a specific time period. It's used
to measure the overall economic performance of a country.
49. GNP (Gross National Product): GNP is the total value of all goods and
services produced by a country's residents, both domestically and
internationally. It includes the country's GDP plus net income from abroad.
50. Revenue Deficit: Revenue deficit occurs when the government's total revenue
expenditures exceed its total revenue receipts (excluding borrowings and
capital receipts). It indicates that a significant portion of government funds are
being used for day-to-day expenses rather than investment.
51. Disinvestment: Disinvestment refers to the sale or liquidation of government-
owned assets, such as shares in state-owned enterprises. It can be done to
reduce the government's financial burden or to promote private sector
participation.
52. Fiscal Deficit: Fiscal deficit is the difference between the government's total
expenditures and its total revenues (excluding borrowings). It indicates the
extent to which the government needs to borrow to meet its expenses.
53. National Income: National income refers to the total value of all goods and
services produced within a country's borders during a specific period, often
measured as Gross Domestic Product (GDP).
54. Mutual Funds: Mutual funds are investment vehicles that pool money from
multiple investors to invest in a diversified portfolio of stocks, bonds, or other
securities, managed by professional fund managers.
55. Cheque: A cheque is a written, unconditional order issued by an account
holder to their bank, instructing the bank to pay a specific amount to a
designated payee.
 56. Demand Draft: A demand draft (DD) is a prepaid instrument issued by a
bank, often used for making payments, transferring funds, or remittances.
57. NABARD (National Bank for Agriculture and Rural Development):
NABARD is an apex development financial institution in India that focuses on
providing credit and financial services to promote agriculture and rural
development.
58. SENSEX and NIFTY: SENSEX is a stock market index that represents the
performance of the 30 largest and most actively traded companies on the
Bombay Stock Exchange (BSE). NIFTY is a stock market index representing the
National Stock Exchange (NSE) of India, comprising 50 major companies.
59. SEBI (Securities and Exchange Board of India): SEBI is the regulatory
authority for the securities market in India. It oversees and regulates various
aspects of securities trading and aims to protect the interests of investors.

Why do we need a credit management system? A credit management system

helps financial institutions assess the creditworthiness of borrowers, monitor their
credit activities, and manage risks associated with lending. It aids in making informed
lending decisions and minimizing the likelihood of defaults.

What is the source of income for banks? Banks generate income primarily through
interest earned on loans and advances they provide to borrowers, fees charged for
various banking services, and returns on their investments in financial markets.

What do you understand by the term balloon payment? A balloon payment

refers to a large, lump-sum payment that is due at the end of a loan term. It's
commonly associated with loans that have relatively low monthly payments but
require the borrower to make a substantial final payment to fully repay the loan.

What are the different types of loans that banks provide? Banks offer various
types of loans, including:

 Personal Loans
 Home Loans (Mortgages)
 Auto Loans
 Education Loans
 Business Loans
 Credit Card Loans
 Overdraft Facilities

How is a cheque different from DD (Demand Draft)? A cheque is a negotiable

instrument issued by an account holder to make payments, while a Demand Draft
(DD) is a prepaid instrument issued by a bank, typically used for making payments or
transferring funds within the same country or internationally.
What are CRR and SLR? CRR (Cash Reserve Ratio) is the portion of a bank's total
deposits that it is required to keep with the central bank in the form of cash. SLR
(Statutory Liquidity Ratio) is the percentage of deposits that banks must maintain in
the form of liquid assets like cash, gold, or approved securities.

How would you define ACH? ACH (Automated Clearing House) is an electronic
payment system that facilitates the transfer of funds between bank accounts. It is
commonly used for direct deposits, bill payments, and other electronic funds
transfers.

Can you explain repo rate and reverse repo rate? Repo rate is the rate at which
the central bank lends money to commercial banks, influencing the cost of
borrowing in the economy. Reverse repo rate is the rate at which banks can park
excess funds with the central bank.

What are the main functions of the RBI (Reserve Bank of India)? The Reserve
Bank of India (RBI) performs various functions, including:

 Issuing and managing currency

 Formulating and implementing monetary policy
 Regulating and supervising financial institutions
 Managing foreign exchange reserves
 Promoting financial stability and economic growth

Can you elaborate on currency convertibility? Currency convertibility refers to the

ease with which one country's currency can be exchanged for another country's
currency. Convertibility can be restricted (limited) or fully convertible (freely tradable)
based on a country's exchange rate policies.

What is a foreign draft? A foreign draft is a type of check or payment instrument

issued in a foreign currency and payable in the currency of the recipient's country. It's
used for international money transfers and payments.

Investment Banking: Investment banking involves providing financial advisory

services, underwriting, and facilitating mergers and acquisitions for corporations,
governments, and other institutions. It focuses on raising capital and providing
strategic financial advice.

FDI (Foreign Direct Investment) vs. FII (Foreign Institutional Investment): FDI
involves investing directly in physical assets or businesses in a foreign country, while
FII refers to investments made by foreign institutions in a country's financial markets,
such as stocks and bonds.
Debt to Income Ratio: The debt-to-income ratio is a financial measure that
compares a person's or entity's total debt payments to their gross income. It helps
lenders assess an individual's ability to manage their debt obligations.

Amortization: Amortization is the gradual repayment of a loan over time through a

series of regular payments, which includes both principal and interest. It's commonly
used for mortgages and other long-term loans.

Charge-off: A charge-off occurs when a lender considers a debt as unlikely to be

collected and removes it from its books as a loss. This doesn't mean the borrower is
no longer responsible for the debt; it's still owed, but it's considered uncollectible by
the lender.

Line of Credit: A line of credit is a pre-approved borrowing limit that allows

individuals or businesses to access funds as needed. It's a flexible form of borrowing
where interest is paid only on the amount used.

Non-Performing Assets (NPAs): NPAs are loans or advances that have stopped
generating income for the lender due to non-payment by borrowers. These loans are
typically classified as NPAs after a specified period of non-payment.

Banking Ombudsman Scheme: This scheme is introduced by the Reserve Bank of

India to provide a quick and cost-free resolution mechanism for complaints against
banks related to certain services.

SEBI (Securities and Exchange Board of India): SEBI is the regulatory authority for
the securities market in India. It oversees and regulates various aspects of securities
trading and aims to protect the interests of investors.

Question 3: What are the types of accounts in a bank?

Banks offer several types of accounts to cater to different financial needs. Some
common types include:

 Savings Accounts
 Current Accounts
 Fixed Deposit Accounts
 Recurring Deposit Accounts
 NRI Accounts (for non-resident Indians)
 Salary Accounts
 Joint Accounts
Question 4: What are the necessary documents a person requires to open an
account in a bank?

The specific documents required can vary based on the type of account and the
country's regulations. However, common documents include:

 Proof of identity (such as a passport, driver's license, or Aadhar card)

 Proof of address (utility bill, rental agreement, etc.)
 Passport-sized photographs
 PAN card (for tax purposes)
 Initial deposit amount

Question 6: What is the annual percentage rate (APR)?

APR stands for Annual Percentage Rate. It is the annualized interest rate that takes
into account not only the interest on a loan but also certain fees or costs associated
with the loan. APR provides a clearer understanding of the overall cost of borrowing.

Question 11: What is the line of credit?

A line of credit is a flexible borrowing arrangement offered by financial institutions. It

allows individuals or businesses to access a pre-approved amount of funds as
needed, up to a certain limit. Interest is charged only on the amount borrowed, not
the entire credit limit.

Question 15: What is a Payday loan?

A payday loan is a short-term, high-interest loan designed to provide quick cash to

borrowers, typically to be repaid on their next payday. These loans are usually small
in amount and come with significantly higher interest rates compared to traditional
loans.

Question 19: What is a home equity loan?

A home equity loan is a type of loan where homeowners can borrow against the
equity they've built in their home. The equity is the difference between the home's
current market value and the remaining mortgage balance. These loans often have
lower interest rates because they're secured by the home.

Question 21: What are the non-performing assets of the company?

Non-Performing Assets (NPAs), also known as bad loans, are loans or advances that
have stopped generating income for the lender. When borrowers fail to make
repayments for a certain period, their loans are categorized as NPAs. This can lead to
financial losses for banks and financial institutions.

What is KYC? Why is it important?

KYC stands for Know Your Customer. It is a process where financial institutions verify
the identity of their customers before providing services. It's important for
preventing fraud, money laundering, and other illegal activities.

What are the functions of RBI?

The Reserve Bank of India (RBI) has several key functions, including:

 Issuing and managing currency

 Regulating and supervising banks and financial institutions
 Formulating and implementing monetary policy
 Managing foreign exchange reserves
 Ensuring financial stability and economic growth