​Most Common Bank Interview Questions and Answers for Sure Success

January 10, 2023
bank interview questions and answers

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Banking jobs are some of the most reputed among other jobs. Annually, thousands prepare for banking examinations and bank interview questions and answers for a chance to work in a bank. The interview process will judge the candidate’s aptitude and ability to survive in a bank. There are so many banking exams such as SBI PO, IBPS Clerk, IBPS PO, IBPS RRB, and RBI Grade that a candidate can apply for to get a job at one of the nation’s reputable banks.

When a candidate has the right qualifications, work experience, and attitude to work in a bank, it is important to perform well in the interview. The deciding factor would be prepared well with a list of intended bank interview questions and answers. Include basic banking terms, the latest banking news, and bank products and services.

Meaning of Banking Sector in India

The Indian banking sector is old and traces back to the mid-18th century. The first known bank was the Bank of Hindustan, set up in 1770 and liquidated in 1829-1832. After that, the General Bank of India was formed in 1786 but was liquidated in 1791. Since then, the banking sector has changed immensely and is one of Asia’s largest and fastest growing.

India has 12 public sector banks, 22 private sector banks, 46 foreign banks, and 56 regional rural banks. There are also over 1,485 urban cooperative banks and around 96,000 rural cooperative banks. These banks together contribute to a total of 2,13,145 ATMs in the country.

India’s banking sector contributes greatly to the development of the country. They will enforce the monetary policy and maintain economic growth without triggering inflation. The banking industry also requires thousands of employees, making this massive sector work smoothly. Annually, thousands of students prepare for bank job interview questions and apply for a chance to achieve sustainability in their careers.

Perks of Banking Jobs in India

When discussing the benefits of working in a bank, most people think of pay and job security. However, there are many more reasons why graduating students should consider preparing for a banking job.

High Pay Scale

The banking industry probably has some of the best salaries in the country. Even the entry-level jobs at banks are higher than jobs in other sectors. For example, the basic Probationary Officer’s salary in the State Bank of India is INR 41,960/- monthly. There are also regular increments before candidates get promoted.

Secure Job

One of the top reasons why everyone advocates for a banking job are its job security. Everyone wishes to be secure in their jobs, and the banking sector provides just that. Individuals face interview questions for banking jobs and get trained to work no matter the state of the economy. Unless the individual does something illegal or unethical, banking employees rarely lose their jobs.

Prestige

Preparing for bank interview questions and answers, taking examinations, and sitting for interviews before finally landing a bank job, takes time and effort. Society and other people realize this and place bank jobs in high regard. Working in a bank is a social prestige aspect because there are regular salary increments and promotions.

Career Growth

Banking jobs, in general, have a long career path. Once employed, individuals experience stable careers where they can advance to management-level positions. There are also opportunities to transfer between departments. Despite being stressful, most employees will retire from their bank jobs.

Transferrable Skills

Bankers can work in different industries if they so wish to. During interviews, banking questions and later training are designed to equip individuals with skills that will work well in other jobs. Some such skills are the ability to look at details, quick decision-making, leadership, and strong communication skills.

Types of Banks in India

With the banking examination season coming up,

it is important to brush up on bank interview questions and answers. To start the preparation, one must know the type of banks in India.

Type of BankDescription
Central BankThe central bank is the bank that controls the activities of all the other banks in the country. In India, the Reserve Bank of India is the Central Bank. Among its many functions, it will issue currencies, implement the monetary policy and look over the entire financial status of the country.
Cooperative BankCo-operative banks are financial entities that work cooperatively, meaning all customers are also part owners. An elected committee runs them on a no-profit and no-loss basis. Co-operative banks provide finance to local entrepreneurs and small-scale businesses. There are two types of cooperative banks, urban and state.
Commercial BankUnlike co-operative banks, the banks that operate on a profit basis are called Commercial Banks. They accept deposits from their customers and provide loans to those requiring them. Commercial banks are either owned by the central or state Government or are privately owned.
Small Finance BankAnother type of bank that frequently banking questions for interviews are small finance bank. These banks provide finance to micro industries, small businesses, and small farmers. All functions of commercial banks are also done by the small finance banks, providing loans.
Payments BankA popular banking-related interview question is about Payments Bank. This is a new type of bank in India that does not issue any credit or give out loans. They accept deposits from customers of up to INR 2 lakh and have ATM and debit cards with net banking features.

Most Common Bank Interview Questions and Answers

Q.1 Tell me about yourself.

​The first commonly asked banking job interview question is an introduction of the candidate. This is typically a question to start the conversation and get a brief overview of the candidate’s profile. Answer the name, educational qualifications, and work experience in short. Do not make this answer too long and also include only the essentials.

Q.2 Why would you want to join the banking sector?

This is one bank interview question and answer requiring a little thought. Do not answer by saying the pay grade and also career progression. Discuss why the banking sector is important, its contribution to the economy, and the growth rate. Stating some figures will also help here.

Q.3 What are the different types of bank accounts?

​This is a pretty straightforward bank job interview question. Answer in brief about the types of accounts.

  • Current Account: The current account is used for transactions without withdrawal limits. Customers can deposit and withdraw their money whenever they wish to.
  • Savings Account: The Savings Account provides interest on the deposited money. Customers can also deposit and withdraw their money from their savings accounts.
  • Fixed Deposits: Fixed deposits are a long-term savings tool. The customer cannot withdraw the money before the said period expires.
  • Demat Account: This is an account for investment purposes. More specifically, buying and selling of shares. The regular Demat account is, in particular, meant only for Indian people.
  • Recurring Deposit Account: The Recurring Deposit Account helps people save a regular amount of money every month. The bank automatically deducts the money every month.

Q.4 What do you need to open a bank account?

​This is one interview question for banking jobs requiring knowledge of RBI’s KYC procedure. This states that each customer must submit personal documents to prove their identity, address, etc. Specifically, one must submit a PAN or Aadhar card for identity proof. The latter can also be submitted for address proof along with utility bills.

Q.5 What are the different types of commercial banks?

​There are broadly three types of commercial banks.

  • Public Bank: Public banks are nationalized. The central Government has a majority stake in these banks. Examples of public banks are the State Bank of India and Corporation Bank.
  • Private Bank: Private banks are under private ownership and also management. These banks have limited liability. HDFC bank, ICICI bank, and Yes Bank are examples of private banks.
  • Foreign Bank: Foreign banks, per the name, are banks with branches worldwide. Their headquarters are, generally, in another country. For instance, American Express Bank and HSBC are foreign banks in India.

Q.6 What is the annual percentage rate?

​The Annual Percentage Rate or APR is the annual interest charge from the bank on its customers. This charge is levied when customers use banking services like credit cards and loans. Simply put, it is the cost one must pay to borrow money from banks.

Q.7 Define amortization and its types.

​For this bank interview, questions and answers are simple. Amortization refers to paying off loans or mortgages in regular instalments. This payment is made to repay an original principal amount with interest. Negative amortization, on the other hand, is the opposite of regular amortization. Here, the principal amount does not decrease with every payment but increases.

Q.8 What do you mean by Debt-to-Income Ratio?

​Debt to income ratio is an important banking interview question and answer for freshers. It compares how much one earns vs how much one owes. Here, the basic income of individuals is taken into account, as also the monthly bills like rent and mortgage.

Q.9 What is a Line of Credit?

​Anyone preparing for bank interview questions and answers must know what a line of credit is. It is a credit for a flexible loan given by banks to customers. This is for a specific amount and must be repaid immediately with interest.

Q.10 What are the different types of loans?

​Another basic banking question that interview candidates should know is the type of loans available at commercial banks. There are either secured or unsecured loans. For the former, the individual provides security to avail of the loan. Some examples of secured loans are home loans, property loans, loans against insurance, gold loans etc. Unsecured loans do not require any security. For instance, personal, Flexi, vehicle, and unsecured loans.

Q.11 What is an interbank deposit?

​Next on the list of bank interview questions and answers for freshers are interbank deposits. This is an arrangement of two banks whereby one can hold funds for the other. The bank-to-bank transfer is also used for quick funds and requires opening an account beforehand.

Q.12 What is a home equity loan?

​One of the easier bank interview questions and answers is about a home equity loan. This is a home loan taken out after giving the equity in the home as collateral. Failure to repay the loan entirely means foreclosure of the home.

Q.13 Different types of fixed deposits?

​There are several types of fixed deposits, besides regular fixed deposits, which must be discussed in this bank interview questions and answers. Each FD also has its own features.

  • Cumulative FD: Interest in this fixed deposit is available at the time of maturity.
  • Non-cumulative FD: Customers receive interest payments at regular intervals.
  • Senior Citizen FD: Fixed deposits for citizens over the age limit of 60 also have a higher interest rate.
  • Company Deposits: Available at NBFCs for companies with a high-interest rate.
  • NRIs FD: Fixed deposit meant for NRIs, OCI and PIOs with NRO account with a high-interest rate.
  • Tax Saving FD: Fixed deposits with a tax exemption of up to INR 1.5 lakh.
  • Flexi FD: Fixed deposits that are linked with a savings account. The excess amount in the savings accounts automatically transfers to the FD.
  • Standard FD: Fixed deposit with fixed tenure and pre-decided interest rate.

Q.14 What do you mean by Non-Performing Assets?

​Among bank-related questions, understanding what non-performing assets are is important. This term refers to a loan for which payment has not been made for over 90 days. Payment, in particular, refers to the principal amount with interest.

Q.15 What is the difference between credit and debit cards?

​The first and basic bank interview questions and answers to know is the difference between a debit and a credit card. Debit cards allow withdrawals on funds already deposited by the customer. On the other hand, credit cards allow customers to borrow money that the customers repay later.

Q.16 What is a payroll card?

A payroll card, another important bank interview question, is a smart card given by employers to employees for wage payments. It is, however, not necessary to have a bank account to use the payroll card.

Q.17 What is the definition of interest rate?

​Interest rate, put simply, is the cost of borrowing money.

Q.18 What do you understand by Line of Credit?

​Many banking interview questions also ask about a line of credit. It is primarily the credit facility provided by banks.

Q.19 What are the different methods for transferring money online?

​Currently, in India, there are five major types of transferring money: RTGS, NEFT, UPI, IMPS and Digital Wallets.

Q.20 What are the different roles in a bank?

​This is one banking job interview question whose answer is wide and must be answered briefly. There are several roles in a bank like a bank teller, banker, loan processor, investment banker, credit analyst, mortgage consultant etc.

Importance of Bank Interview questions and answers

Banking jobs are tough to get into and involve several selection process rounds. The nerve-wracking part of the selection process is the interview round. Here, candidates are asked different bank interview questions and answers to judge their knowledge. Interviewees must aim to gather basic knowledge of the banking industry.

Preparing a list of basic bank interview questions and answers like the types of loans, fixed deposits, KYC, and payroll cards. However, diving too deep into the preparation is not essential. A little confidence and also general knowledge are what will help here.

Frequently Asked Questions

Q.1 How can I prepare for a bank interview?

Ans. The most important part of preparing for bank interviews is the interview questions and answers. Preparing some practice questions and making them bank specific is a good start. Practice answering the banking interview questions and answers and have some questions to ask the interviewer.

Q.2 What are the 3 functions of a bank?

Ans. Banking interview questions and answers state that a bank has several functions. However, they are divided into three categories, primary, agency, and general utility functions. For the first function, the bank accepts deposits and gives out loans. Secondly, in the agency functions, banks collect dividends, raise capital gains, buy and sell bonds, and represent clients in other financial institutions. Finally, general utility functions include issuing bank drafts, letters of credit, travel checks, etc.

Q.3 What is the difference between private and commercial banks?

Ans. One of the most important banking interview questions and answers is the difference between commercial and private banks. Private banks are commercial banks. Commercial banks, in particular, work on a profit basis. They also include public sector banks and foreign banks.

Q.4 Can I go for a banking course after the 12th?

Ans. Yes, there are both short-term and full-term banking courses that a class 12th student is eligible for. However, enrolling on a degree with a banking concentration such as BBA in Banking or B.Com in Banking and Finance is recommended.

Q.5 How do banks make profits?

Ans. In simple words, banks make money on interest. They charge interest on credit given to customers and also loans taken out.

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