Top 30+ Banking Interview Questions and Answers 2022

Banking Interview Questions and Answers

Banking Interview Questions
bank is an diligence of money. Banking includes handling cash, fiscal transactions, credit and debits of the accounts, etc. In simple words, we can say that Banking is all about taking care of the money which is owned by individuals and entities. Our huge solicitation of Banking Interview Questions are the best resources for cracking your interviews .

Importance of Banking

  • Banks provides several saving schemes which in return attract the people to save money.
  • Provides secure money transactions all over the globe
  • Provides loan to the agricultural sector at a very low-interest-rate that indirectly affects us.
  • Generate employment for all the sectors of society

Most Frequently Asked Banking Interview Questions

hera in this article, we will be listing frequently asked Banking Interview Questions and Answers with the impression that they will be helpful for you to gain higher marks. besides, to let you know that this article has been written under the steering of industry professionals and covered all the current competencies .
1. Why do you want to join the banking sector?
The bank sector is regarded as one of the most respected and fastest growing industry. There is growth likely in this sector from the Trainee level to the general coach tied, and the most crucial is this sector has speculate security .
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2. What do you mean by investment banking?
Investment Banking is related to investments in the fiscal market. investment bank does the fiscal transactions or creates capital on behalf of the corporations, individuals and governments. investment bank besides assists in mergers and acquisitions .
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3. What is KYC? Why is it important?
KYC stands to know your customer. KYC is a process by which the banks get the data about their customers, i.e. the identity and cover. The KYC details are taken from the customer while opening the bank accounts. KYC is received from the customer to identify the larceny, to Prevent money from going to the terrorist, Money launder and Financial fraud
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4. What is the difference between check and draft?
Cheque and Demand draft(DD) both are used to make the payments.

S.no Cheque Demand Draft
1. It is issued by the customer It is published by the bank
2. Payment is made after depositing the cheque Demand draft is issued after giving the money to the bank
3. Signature is required in cheque Signature is not required in DD
4. It can bounce It cannot be dishonored

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5. What are the functions of RBI?

Some of the functions of the RBI are:-
  • RBI has a right to issue the currency notes except the One rupee note.
  • RBI manages the banking requirements of the government.
  • RBI supports banks with money in their financial crisis. This is called “lender of last resort.”
  • RBI manages the Foreign Currency

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6. How is beta calculated in CAPM?

ERi = Rf + βi (ERm- Rf)

Eri = Expected fall of investment or security
Rf = risk-free rate
βi = Beta of the investment or security
ERm = Expected revert of the grocery store
(ERm – Rf) = Market risk premium

Beta measures the risks in the stocks that have been invested. If a stock is riskier than the commercialize, then the beta will be higher than one. If a stock has less gamble, then the beta will be less than one .
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7. What is working capital and how is it calculated?
Working capital or net solve capital is the difference between a company ’ s stream assets such as cash, customers ’ unpaid bills, inventories and the companies stream liabilities like accounts account payable .

Working Capital = Current Assets – Current Liabilities

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8. What do you mean by Money Laundering?
Money laundering is the method of generating an impression that the money which has been collected from drug traffic, criminal natural process is from the legal source .
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9. What do you mean by CRR & SLR rate?
CRR stands for cash military reserve proportion, and SLR stands for statutory liquidity ratio. In CRR, some percentage of the total bank deposits must be kept in the current account with the RBI. The banks do not have license to use that money for any commercial bodily process. Banks can ’ t use that money for investment purposes. here, the banks don ’ t earn any pastime on money .
In SLR, some percentage of the full bank deposits is invested in specific securities chiefly the central government and the submit government securities. hera the bank earns a certain come of sake on their investment .
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10. What is the difference between APR and interest rate?

S.no APR Interest Rate
1. It includes the interest rate and the other costs like the broker fees It Includes the expenditure of borrowing the principal loan amount
2. Monthly payment is not based on Interest rate Monthly payment is based on Interest rate and the principal balance amount

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11. What are the core banking applications?
Core stands for Centralized Online Real-time Exchange. Core bank is a deposit servicing that has been provided by a group of network bank branches where the customers can access their deposit accounts and can besides perform the necessity transactions from any of the penis branch offices. This application is for retail bank .
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12. What is the bank and explain the types of banks?
A bank is considered as a fiscal mental hospital which deals with money matters. In a deposit, customers can deposit and borrow money, and besides it takes care of their fiscal stabilities .
There are two types of banks:-

  • Retail Banking
  • Business Banking
  • Corporate Banking
  • Private Banking
  • Investment Banking

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13. What do you mean by commercial banking and explain its types?
The commercial bank includes short-run loans to small business and individuals, withdrawals and depository of money, savings accounts, home mortgages. The money that the customer deposits in the bank is utilized by the bank to give a business lend, personal lend, mortgages and family repair loans .

Types of Commercial Banking
  • Retail or consumer banking
    Retail Banking service is provided by the bank for the general public and for the small businesses.
  • Corporate or business banking
    Business banking is the service which is provided by the bank for the large-sized and middle-sized businesses.
  • Securities and Investment banking
    Investment Banking does the financial transactions or creates capital, assist in mergers and acquisitions on behalf of the corporations, individuals and governments.
  • Non-traditional options
    There are various non-bank entities which offer financial services precisely like what the bank provides. The non-bank entities are credit card companies, credit card report agencies, etc.

This is the favored interview question in banking interview questions .
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14. In the Banking Scenario, what are the essential needs of the Banking Industry?
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15. Explain the types of accounts in banks?

There are six types of account in banks:-
  • Current Account:- This account is for people with businesses, firms, and companies. Any number of transactions or the amount of transactions customers can do in a day.
  • Savings Account:- This account is used by the public for saving the money. Any person can open the account single or a joint account. The advantage of having a saving bank account is bank pays the interest on your savings.
  • Recurring Deposit Account: -This account is opened when a person wants to save a certain amount of money every month and earn a high rate of interest.
  • Fixed Deposit Account:- This account is opened when a person wants to put a specific amount for a particular time and get a high rate of interest.
  • DMAT Account:- This account is used to perform the transactions on the shares.
  • NRI Account:- This account is for the Indians who are settled out of India.

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16. What documents are required for KYC?

The documents required for KYC are:-
  • Identity Proof:-Passport, Driving Licence, PAN Card, Voter’s ID Card, Aadhaar Card
  • Address proof:-Passport, Driving Licence, PAN Card, Voter’s ID Card, Aadhaar Card
  • Recent photograph

point to be noted : Go through this Q & A very thoroughly as this is one of the critical banking interview questions .
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17. Explain the different ways you can operate your accounts?

The different ways to operate my accounts are:-
  • Internet banking
  • Mobile banking
  • Going to the Bank
  • ATM ( Automated Teller Machine)

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18. What is ‘Crossed Cheque’? Explain
A crossed cheque is a check which has been passed with two parallel lines on the top left-hand corner of the control. This check can not be encashed at the bank ’ s cash counterpunch. This check can only be credited to the payee ‘s bill. The cross cheque provides the security to the payer .
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19. What is the CAPM formula?
CAPM stands for the Capital Asset Pricing Model. This model explains the relationship between the systematic gamble and the expect render for assets chiefly stocks. CAPM is used in finance for pricing the hazardous securities and as a result, generating the command rate of restitution of an asset .
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20. How do you calculate the rate of return on a stock?
The rate of Return can be calculated by the formula:-
The price of Return=Current Rate-Initial Value
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21. Explain the difference between accretion and amortization?

S.no Accretion Amortization
1. It is the increase in the price of the bond as compared to the purchase price It is the decrease in the amount of the relationship as compared to the purchase price

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22. What is accretion accounting?
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23. Explain different types of bank loans?
The different type of loans are:-

  • Secured:- A loan in which a borrower gives some asset as collateral like mortgage loan
  • Unsecured:- A loan in which a borrower does not provide the assets as collateral like personal loans
  • Demand:- These loans are the short term loans which do not have a fixed date of the repayment.
  • Subsidized:- In these loans, the interest is reduced by the hidden subsidy

Concessional : – These loans are given at the lowest commercialize rates .
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24. What is discount accretion?
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25. Which software is used in the banking sector?
The banking software that is used by the banks are:-

  • Finacle by Infosys.
  • BaNCS by TCS.
  • Flexcube by Oracle.

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26. Explain the different types of banking software applications are available in this industry?

Some of the banking software applications are:-
  • Internet banking system: This application allows the customers and the banks to do the transaction using the bank’s website.
  • Stock market management system: This application manages the financial portfolio like securities and bonds.
  • Loan management system: This application collects all the data and maintains the track about the customers who borrow the money.
  • ATM banking (Automated Teller Machine): ATM is an electronic banking machine which allows the customers to complete necessary transactions.

This is besides an essential question in banking interview questions .
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27. What are the types of working capital?

There are four types of working capital:-
  • Gross Working Capital
  • Networking Capital
  • Permanent or Fixed Working Capital
  • Temporary or Variable Working Capital

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28. Why Is Debt a cheaper source of finance?
Debt finance is a cheaper source of finance because of the two essential points:-

  • The company gets an income tax benefit on the interest component that is paid to the lender.
  • If the company becomes bankrupt, debt holders have the first claim on their company assets (collateral) which increases their security

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29. What are the advantages of equity financing over debt financing?

The advantages of equity financing over debt financing are:-
  • Company owner does not have to pay the fixed monthly loans
  • Equity financing does not take money from the company’s cash flow.
  • The Company has an opportunity to grow

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30. Why should a company prefer equity finance to debt finance?
equity finance is preferred over debt finance because in Equity finance the caller has more opportunity to grow in the clientele because the owner of the party gives equity investors an excellent return on their investment, but there are no necessitate monthly payments associated with fairness finance due to which company has no fiscal load .
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31. What is the treasury stock method?
The treasury stock method is a process in which the companies to calculate how many extra shares can be generated from the outstanding in-the-money warrants and the options. These new shares that have been added can then be used in calculating the party ’ mho diluted earnings per plowshare ( EPS ) .
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32. How do you calculate treasury stock?

Treasury Stock Method Formula:

Additional outstanding shares = Shares from the exercise – repurchased shares

Additional great shares = north – ( newton x K / P )
Additional great shares = n ( 1 – K/P )

In the formula:-

N = shares from the options or the drill warrants
P = Average contribution monetary value for the period
K = Average practice parcel price
Solve some questions on this. This one of the vital banking interview questions .
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Types of banking:-

  • Retail Banking
  • Business Banking
  • Corporate Banking
  • Private Banking
  • Investment Banking
Retail Banking

retail deposit is besides called as Consumer Banking or Personal bank. Retail Banking service is provided by the bank for the general public and the small businesses. retail banking includes personal loans, debit and credit cards, saving accounts, stream accounts .

Business Banking

business banking or commercial bank is the service which is provided by the bank for the middle-sized businesses. business bank includes occupation loans, investment products, fiscal products which functions as a business for getting a net income .

Corporate Banking

bodied banking is besides a business banking service which is provided by the bank for the large size clientele like Finance Institutions and corporates

Private Banking

private bank is the service provided by the bank to the HNWI ( High Net-Worth Individuals ). They are those individuals who hold fiscal assets with a rate much more significant than 1 million US dollars. Private Banking services include wealth management strategies .

Investment Banking

investment bank is related to investments in the fiscal market. investment banking does the commercial enterprise transactions or creates capital on behalf of the corporations, individuals and governments .
The banking interview questions we are mentioning below will help you to gain adequate of the cognition of becoming an effective team leader. about Best Interview Question


Best Interview Question
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