Banking Interview Questions and Answers
Banking is an industry of money. Banking includes handling cash, financial 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 vast collection 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
| 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 |
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 market rates.
The banking software that is used by the banks are:-
- Finacle by Infosys.
- BaNCS by TCS.
- Flexcube by Oracle.
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 also an essential question in banking interview questions.
There are four types of working capital:-
- Gross Working Capital
- Networking Capital
- Permanent or Fixed Working Capital
- Temporary or Variable Working Capital
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
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
Equity finance is preferred over debt finance because in Equity finance the company has more opportunity to grow in the business because the owner of the company gives equity investors an excellent return on their investment, but there are no required monthly payments associated with equity finance due to which company has no financial burden.
Types of banking:-
- Retail Banking
- Business Banking
- Corporate Banking
- Private Banking
- Investment Banking
Retail Banking
Retail Banking is also called as Consumer Banking or Personal banking. 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, current accounts.
Business Banking
Business banking or Commercial Banking is the service which is provided by the bank for the middle-sized businesses. Business banking includes business loans, investment products, financial products which functions as a business for getting a profit.
Corporate Banking
Corporate Banking is also a business banking service which is provided by the bank for the large size business like Finance Institutions and corporates
Private Banking
Private Banking is the service provided by the bank to the HNWI (High Net-Worth Individuals). They are those individuals who hold financial assets with a value much more significant than 1 million US dollars. Private Banking services include wealth management strategies.
Investment Banking
Investment Banking is related to investments in the financial market. Investment Banking does the business 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 enough of the knowledge of becoming an effective team leader.