From lucrative pay and benefits to rapid career progression and job security, the banking sector is an appealing one for those aiming to pursue a career in the domains of finance and management. Since the recruitment process of banks is quite extensive and rigorous, one needs meticulous preparation, decisive strategy coupled with aptitude skills and good academic qualifications to soar towards a successful career in banking. Once you have appeared for bank exams, the next step is the personal interview given that you have successfully cleared the different level of exams. In order to ace the interview, you need to impress interviewers with your knowledge of bank operations and intricacies of bank management. Thus, to help you practice the most common questions, we have collated a list of bank interview questions and answers that you must know about before appearing for the interview.
Also Read: Bank Exam Preparation Apps
Top 10 Bank Interview Questions and Answers
Here is a list of top bank interview questions with answers that you must prepare once you have cleared the exam and are invited for a personal interview:
1. How do you define a bank? Name the types of banks?
The bank can be defined as a financial institution or organisation which is authorized and licensed to receive cash for deposits. The major two types of banks are commercial banks and investment banks. Moreover, banks are regulated either by the central bank or national government.
2. Define an investment bank?
The main aim and purpose of an investment bank are to manage financial assets, fixed income and facilitate corporate advisory services. They are a financial intermediary that handle varied tasks on behalf of individuals, corporations and government and are responsible for managing commodity and currency for mergers and acquisitions apart from handling equities and debts.
3. Explain a commercial bank.
In simple terms, a commercial bank is owned and controlled by a group of individuals or a Federal Reserve System. They are responsible for receiving deposits apart from earning interest from the borrower. Commercial banks provide home repair loans, auto loans and other form of business loans.
4. How many ways are there to operate bank accounts?
Banks are a prime institution where your money is in safe hands. The internet has certainly transformed the traditional chequebook and passbook methods for operating bank accounts and now one can utilise various options for maintaining their personal accounts such as:
- Internet banking (e-banking)
- Mobile banking
- Counter service or branch banking
- ATM (Automatic teller machine)
5. How will you define a “crossed cheque”?
A crossed cheque elucidates the amount which is deposited into a payee’s personal account and it also means that this amount can’t be withdrawn over the counter by the bank.
While exploring these bank interview questions & answers, you must also check out our exclusive blog on Bank PO!
6. How do you understand the term ‘overdraft protection’?
This service is provided by the bank for those customers who have multiple accounts in the same bank. If the customer is facing a shortage of cash in one of their accounts, the bank can transfer their money to another account. Also, it is a chargeable service but the amount will only be deducted if you begin using the service.
7. Define the Prime Rate.
Having a pivotal role for those aiming to gain an excellent credit score, the prime rate can simply be termed as the rate of interest at which a bank lends to their preferred credit-worthy customers. Moreover, prime rates do differ much from each other. Let’s understand this with the example, APR (Annual Percentage Rate) on a particular credit card is 10% including a prime rate of 3%. Therefore, the credit card’s APR would be 13%.
8. Explain the term ‘balloon payment’?
The concept of balloon payment is quintessential in the banking industry. It is a lump sum paid at the end of the loan term which is significantly larger than all of the payments made before. On instalment loans without a balloon option, a series of fixed payments are made to pay down the loan balance. The concept of balloon payment enables borrowers to reduce the fixed payment amount in exchange for making a larger payment at the end of the loan term.
9. What do you understand by the term Amortization and negative amortization?
Amortization can be referred to as the process of covering a principal amount of loan in instalments with interest. On the other hand, negative amortization takes place when the repayment of the loan is generally lesser than the accrued interest.
10. How do you define ‘loan grading’?
Loan grading is the central process that checks the main parameters while providing a loan. It takes a wide range of factors into consideration like risk payment, the borrower’s credit history etc. It aims to check the risk and stability associated with the loan.
Now that you have a clear picture of the important bank interview questions, you must familiarize yourself with the different banking concepts that are generally asked. Let’s take a look at some additional bank interview questions that you can further practice:
- How you define the team Co-Maker?
- Define the line of credit.
- What do you make of a payroll card?
- What you understand with the term ‘payday loan and charge off’?
- Explain the financial management system.
- Elaborate upon the difference between cheque and a demand draft.
- What is the debt to income ratio?
- What is credit netting?
- What is the credit check?
- Explain the term ‘Irrevocable Letter Of Credit’?
Must Read: RBI Assistant Exam
Hopefully, this blog has helped you with a clearer understanding of bank interview questions and answers. Aiming to pursue a course in Banking? Sign up for an e-meeting with our Leverage Edu experts and we will assist you in selecting the best programme and university that fits your interests and preferences and equips you with the necessary skills and exposure to build a rewarding career in Banking.