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Federal Po interview Questions

REPO RATE: - Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. Repo rate is also called (repurchase agreement or repurchase option). REVERSE REPO RATE: - is the interest rate earned by the bank for lending money to the RBI in exchange of govt. securities or "lender buys securities with agreement to sell them back at a predetermined rate". CASH RESERVE RATIO: - specifies the percentage of their total deposits the commercial bank must keep with central bank or RBI. Higher the CRR lower will be the capacity of bank to create credit. SLR: - known as Statutorily Liquidity Ratio. Each bank is required statutorily maintain a prescribed minimum proportion of its demand and time liabilities in the form of designated liquid asset. OR "Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc". BANK RATE: - is the rate of interest which is charged by RBI on its advances to commercial banks. When reserve bank desires to restrict expansion of credit it raises the bank rate there by making the credit costlier to commercial bank. OVERDRAFT:- It is the loan facility on customer current account at a bank permitting him to overdraw up to a certain agreed limit for a agreed period ,interest is payable only on the amount of loan taken up. PRIME LENDING RATE: It is the rate at which commercial banks give loan to its prime customers.

Statutory Liquidity Ratio SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit.

SLR rate = total demand/time liabilities 100%

CRR Rate in India

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.

Difference between SLR and CRR


Both CRR and SLR are instruments in the hands of RBI to regulate money supply in the hands of banks that they can pump in economy SLR restricts the banks leverage in pumping more money into the economy. On the other hand, CRR, or cash reserve ratio, is the portion of deposits that the banks have to maintain with the Central Bank to reduce liquidity in economy. Thus CRR controls liquidity in economy while SLR regulates credit growth in the country The other difference is that to meet SLR, banks can use cash, gold or approved securities whereas with CRR it has to be only cash. CRR is maintained in cash form with central bank, whereas SLR is money deposited in govt. securities.

What is a Reverse Repo Rate?


How will it affect the Bank Loan interest rates
Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. It can cause the money to be drawn out of the banking system. Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man.

What is Inflation?

Inflation is defined as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average

level of prices in Goods and services. Inflation happens when there are less Goods and more buyers, this will result in increase in the price of Goods, since there is more demand and less supply of the goods.

What is a Repo Rate? Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive

What are IIP numbers?


Index of Industrial Production (IIP) - Indicator for India Incs growth IIP number or IIP data (Index of Industrial Production) is a measurement which represents the status of production in the industrial sector for a given period of time compared to a reference period of time. IIp number is one of the best statistical data, which helps us to measure the level of industrial activity in Indian economy. Please note that IIP data is a short-term indicator of our industrial growth till the actual results from Annual Survey of Industries (ASI) is published. IIP data is a very important indicator to the Government for planning purposes and is also used by various organisations like Industrial Associations, Research Institutes, Financial Institues and Academicians.

Banking Terms for interview


Learn about the basic banking terms used. These terms are useful for your general knowledge as well as for your interview. Personal interview plays a very crucial role in final selection. Also these bank related terms are useful for Commerce students, MBA students. Knowing basic banking terms not only gives you an edge over other candidates but also shows your interest level for the job.

RBI The Reserve Bank of India is the apex bank of the country, which was constituted under the RBI Act, 1934 to regulate the other banks, issue of bank notes and maintenance of reserves with a view to securing the monetary stability in India. Demand Deposit A Demand deposit is the one which can be withdrawn at any time, without any notice or penalty; e.g. money deposited in a checking account or savings account in a bank. Time Deposit Time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn or it can be held for another term. Fixed Deposits FDs are the deposits that are repayable on fixed maturity date along with the principal and agreed interest rate for the period. Banks pay higher interest rates on FDs than the savings bank account. Recurring Deposits These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period. Savings Account Savings account is an account generally maintained by retail customers that deposit money (i.e. their savings) and can withdraw them whenever they need. Funds in these accounts are subjected to low rates of interest. Current Accounts These accounts are maintained by the corporate clients that may be operated any number of times in a day. There is a maintenance charge for the current accounts for which the holders enjoy facilities of easy handling, overdraft facility etc. FCNR Accounts Foreign Currency Non-Resident accounts are the ones that are maintained by the NRIs in foreign currencies like USD, DM, and GBP etc. The account is a term deposit with interest rates linked to the international rates of interest of the respective currencies. NRE Accounts Non-Resident External accounts are the ones in which NRIs remit money in any permitted foreign currency and the remittance is converted to Indian rupees for credit to NRE accounts. The accounts can be in the form of current, saving, FDs, recurring deposits. The interest rates and other terms of these accounts are as per the RBI directives. Cheque Book - A small, bound booklet of cheques. A cheque is a piece of paper produced by your bank with your account number, sort-code and cheque number printed on it. The account number distinguishes your account from other accounts; the sort-code is your bank's special code which distinguishes it from any other bank. **Knowing basic banking terms not only gives you an edge over other candidates but also shows your interest level for the job. So my suggestion would be that you through all the banking terms thoroughly.

Cheque Clearing - This is the process of getting the money from the cheque-writer's account into the cheque receiver's account. Clearing Bank - This is a bank that can clear funds between banks. For general purposes, this is any institution which we know of as a bank or as a provider of banking services. Bounced Cheque - when the bank has not enough funds in the relevant account or the account holder requests that the cheque is bounced (under exceptional circumstances) then the bank will return the cheque to the account holder. The beneficiary of the cheque will have not been paid. This normally incurs a fee from the bank. Credit Rating - This is the rating which an individual (or company) gets from the credit industry. This is obtained by the individual's credit history, the details of which are available from specialist organisations like CRISIL in India. Credit-Worthiness - This is the judgement of an organization which is assessing whether or not to take a particular individual on as a customer. An individual might be considered credit-worthy by one organisation but not by another. Much depends on whether an organization is involved with high risk customers or not. Interest - The amount paid or charged on money over time. If you borrow money interest will be charged on the loan. If you invest money, interest will be paid (where appropriate to the investment). Overdraft - This is when a person has a minus figure in their account. It can be authorized (agreed to in advance or retrospect) or unauthorized (where the bank has not agreed to the overdraft either because the account holder represents too great a risk to lend to in this way or because the account holder has not asked for an overdraft facility). Payee - The person who receives a payment. This often applies to cheques. If you receive a cheque you are the payee and the person or company who wrote the cheque is the payer. Payer - The person who makes a payment. This often applies to cheques. If you write a cheque you are the payer and the recipient of the cheque is the payee. Security for Loans - Where large loans are required the lending institution often needs to have a guarantee that the loan will be paid back. This takes the form of a large item of capital outlay (typically a house) which is owned or partly owned and the amount owned is at least equivalent to the loan required. Internet Banking - Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by the bank.

Credit Card - A credit card is one of the systems of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. Debit Card Debit card allows for direct withdrawal of funds from customers bank accounts. The spending limit is determined by the available balance in the account. Loan - A loan is a type of debt. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. There are different kinds of loan such as the house loan, auto loan etc. Bank Rate - This is the rate at which central bank (RBI) lends money to other banks or financial institutions. If the bank rate goes up, long-term interest rates also tend to move up, and viceversa. CRR - CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their deposits in the form of cash with Reserve Bank of India (RBI). This minimum ratio is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, When a banks deposits increase by Rs100, and if the cash reserve ratio is 9%, the banks will have to hold additional Rs 9 with RBI and Bank will be able to use only Rs 91 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system. SLR - SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved to liabilities (deposits). It regulates the credit growth in India. ATM - An automated teller machine (ATM) is a computerised telecommunications device that provides the clients with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVV. Authentication is provided by the customer entering a personal identification number (PIN)

1. What is bank? Ans. Bank is financial institution which accepts deposits from the public for the purpose of lending. 2. Types of banks? Ans. Nationalized banks Private Banks Foreign banks Regional rural banks Co-operative banks Industrial banks etc.., 3. What is a nationalized bank? Banks which are owned and run by government of India are called as nationalized banks. Example: Canara bank, syndicate bank, Vijaya bank, etc.., There are total 20 nationalized banks. State bank of India has got 7 subsidiaries they are State bank of Hyderabad, State bank of Mysore, State bank of Travancore, State bank of

Indore, State bank of Sourashtra, State bank of Bikaner, state bank of Jaipur.
4. When banks are nationalized? Ans. In 1969 : 14 banks were nationalized. In 1980: 6 banks were nationalized. 5. What is a Private bank? Ans. Banks which are owned and run by individuals are called private banks. Example: karnataka bank, karurvysya bank, lakshmivilas bank etc.., 6. What are foreign banks? Ans. Banks which are foreign originated [based] are called foreign banks Example: Citi bank, YES bank etc.., 7. What is RBI [Reserve Bank of India], when it is established and what are its functions? Ans: RBI established in 1935, its head office in Mumbai. Present Governor of RBI D. Subba Rao. Its functions: 1. Issues currency notes 2. Acts as bankers bank 3. Maintains foreign exchange reserves 4. Maintains CRR and SLR

RBI is also called as "bankers bank", because all banks will have a/c's with RBI. It provides funds to all banks hence it is called as BANKERS

BANK.
8. What is RRB'S (regional rural banks)? Ans. Main purpose of RRBs is to improve banking habit in rural areas and save farmers from money lenders. RRBs works under supervision of NABARD (National Bank for Agriculture and Rural Development). NABARD head office is at MUMBAI. Example of RRB'S: Pragathi grameena bank, Rayalaseema grameena bank etc. Every grameena bank is sponsored by a nationalised bank. Example: Pragathi grameena bank is sponsored by "Canara bank". Share capital in RRBs: Central government: 50% Sponsored bank: 35% State government: 15% 9.What are co-operative banks? Ans. The main purpose of co-operative banks is to co-operate small scale industries, and to provide small loans. Example: Bellary dist co-op bank etc. 10. What are industrial banks? Ans. The main purpose of industrial banks is to provide big loans to large scale industries. Examples: IDBI bank, Industrial bank of India etc.., 11. Types of accounts in banks? Ans. Savings bank account [SB a/c]: The main purpose of SB a/c is to encourage small savings from the public. Interest paid on SB a/c is 3

percent. Any individual can open SB a/c. An Indian residing at abroad can open a NRI a/c. NRI represents non-resident Indians.
Current account: Its a running and active account. No interest is paid on current a/c. Current accounts can be opened on firm names. Even individuals can also open current a/cs. But on firm names you cannot open SB a/c. Fixed Deposit account: Amount is kept for a fixed period. Higher rate of interest will be paid on this a/c. Recurring deposit [RD a/c]: A fixed amount can be deposited in monthly installments. Interest rate is same as fixed deposits.

12. What is Cheque? Ans. Cheque is a negotiable instrument containing conditional order to pay sum of money to the person mentioned on it or to the bearer of the

instrument.
13. What is crossing? Ans. Two parallel lines drawn on the top left corner of the cheque. 14. What is account payee cheque? Ans. Account payee cheques can be routed only through accounts. 15. What is a post dated cheque? Ans. The date on the cheque beyond todays date then cheque becomes post dated. 16. What is stale cheque? Ans. Cheque is valid for six months. If the date on the cheque is before six months, then the cheque becomes stale cheque. 17. What is a mutilated cheque? Ans. It is a damaged cheque. 18. What is At Par cheque? Ans. It is payable anywhere in India. 19. What is Multi city cheque? Ans. A cheque which is payable in any branch of a particular bank. 20. What is Repo rate? Ans. The rate at which RBI lends money to other banks. Present repo rate 7.25 percentage. 21. What is Reverse Repo rate? Ans. The rate at which RBI pays interest to the banks. Present Reverse Repo rate 6.25 percentage. 22. Which bank is called as Central bank? Ans. RBI is also called as Central bank. 23. What is Internet banking? Ans. Banking through internet. 24. What is Inflation? Ans. It is a state where money looses the value hence prices will go up (or) Decreasing the value of money.

25. What is Deflation? Ans. It is opposite to inflation. Money will have more value. Here the products looses the value. 26. What is Debit cum ATM card? Ans. The customer can deposit and withdraw cash by means of magnetic ATM card. 27. What is ATM? Ans. Automatic Teller Machine. 28. What is PLR and BPLR? Ans. PLR - Prime Lending Rate. BPLR - Basic Prime Lending Rate. 29. What is Credit card? Ans. Credit card is a plastic instrument that can be used for the purchase of goods and services. You can buy the services and then pay the cash to the bank. Limits will be fixed based on the net worth of the customer. Leading credit cards: VISA, MASTER. 30. What is an NRI a/c? Ans. NRI stands for Non Resident Indian. An Indian who is residing in abroad can open an SB a/c in Indian banks. These accounts are called

NRI a/cs.
31. What is CRR and SLR? Ans. CRR: Cash Reserve Ratio It is the ratio of physical cash that every bank has to keep with RBI. SLR: Statutory Liquidity Ratio It is the ratio of liquid assets that every bank has to keep with RBI. 32. What is RTGS and NEFT? Ans. RTGS: Real Time Gross Settlement. NEFT: National Electronic Fund Transfer. These two are the two methods through which funds can be transferred from one bank to another bank. 33. What is NPA?

Ans. NPA: Non Performing Asset: When a loan becomes bad then it becomes NPA. 34. What is online banking? Ans. Nothing but any where banking. A customer can operate his account from any branch of a particular bank.