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Team Admin :- PO Interview Preparation Group

Questions were asked on 11/01/2015 : on Discussion Forum

41. How evaluation of Banks performed ?
42. What are Local area banks ?
43. What is Negotiable Instrument ?
44. What do you understand by Nationalisation of Banks ? In which year nationalisation been done in India
45. What is faceless banking ?
46. What is Offshore banking ?
47. What is the difference between Mobile and Online banking ?
48. What are payment systems ?
49. Why do banks declare dividends ?
50. What do you understand by Merchant Banking ?
51. Why do PSB present dividend cheques to central government ?
52. Do you know Banks are supposed to observe prudential norms. What are these norms ?
53. Now-a-days we are listening a word - "BASEL-III" . Could you just tell what is this BASEL-III and is their
any other Basel version ? If yes, then what is the difference ?
54. What is stress testing in banks ?
55. Bank's additional means of earnings is fee based income. What does it mean ?
56. Bank's main source of revenue is interest income. What is it ?
57. What is the Board for Financial Supervision ?
58. Do you know about IBA . What role does it play ?
59. Five functions of RBI ?
60. What is the difference between EXIM Bank and Commercial banks ?
61. What is Kiosk Banking ?
62. What is Retail Banking ?
63. What are the significance of Bank Deposits ?
64. What is CASA ?
65. Deposit Accounts are classified under two categories. What are those categories ?
66. What is KYC ?
67. What do you know about Current accounts ? Any specific difference between Current and savings
accounts ?
68. What is Recurring deposits ? What is the difference between RD and FD . Which is more beneficial for
bank and why ?
69. Term - Renewal of Deposits. Could you just give some light on it ?
70. What do you understand by Premature payments ?
71. Which documents are required to open an account ?
72. Who insure bank deposits ? Any norms by insuring body ?
73. What is meant by Accounts of HUF ?
74. Difference b/w retail and wholesale banking ?
75. Do Banks open Pension accounts ?
76. What are Dormant Accounts ?
77. Explain money laundering activities.
78. Why is interest not paid in current accounts ?
79. Can insolvent persons open accounts ?
80. What is TDS on bank interest ?

Check answers : -
Team Admin :- PO Interview Preparation Group

41. How evaluation of Banks performed ?

Ans : - Through CAMELS Which stands for :
C - Capital adequacy
A - Asset quality
M - Management quality
E - Earnings
L - Liquidity
S - Sensitivity to Market Risk
42. What are Local area banks ?
Ans : Banking habit in India is miserable especially if we talk about emerging markets. Villagers and people
from small towns feel safe to keep money buried in their backyard but never trust the banks. With a view to
promote banking facilities in local area, providing institutional mechanisms for promoting rural savings and to
mobilize credit facility for viable economic activities in the rural area Local Area Banks are established there.
These LABs are categorized under private sector and included in the second schedule of RBI Act, 1934.
Scope : These LABs are restricted to operate maximum in three districts.
They will be extending loan facility to agricultural requirements, aggro-trade, aggro-industrial accomplishments,
non-husbandry accomplishments etc.
These banks will observe the priority sector lending target at 40% of Net Bank Credit as other banks do.
Capital : The minimum paid up capital of LABs shall be Rs. 5 cr. However, they are required to increase their
capital from Rs. 5 cr to Rs. 25 cr. In next 5-7 years.
43. What is Negotiable Instrument ?
Ans : An unconditional promise or order in written to pay a fixed amt of money . Transferable via delivery or
endorsement.
44. What do you understand by Nationalisation of Banks ? In which year nationalisation been done in India ?
Ans : Wen a country sovereign under take private organisation with interest of common public welfare nd
believe by passing an ordinance by parliament which clearly mentioned term nationalisation know as
nationalisation of tht industry or organisation.
In concern with Banking industry then govt of India done this in year of 1969 with 14 privately owned banks nd
again with 6 banks out of which 1 is merged.
45. What is faceless banking ?
Ans : - Most of latest banking is done through technology drivenmodels like phone banking, internet banking,
mobilebanking etc where the customer does not interact face toface face with any bank official. This form of
banking is known as faceless banking.
46. What is Offshore banking ?
Ans : Offshore banking - Branch of an Indian bank located at a special economic area or an area away from
the location from the customer in any other nation
OR Banking activity out of the country of the a/c holders mainly in those countries where tax is low called tax
heaven.
47. What is the difference between Mobile and Online banking ?
Ans : Online banking is done over internet which facilitates almost all sevices accept cash deposits like
payment & transaction statement, etc
whereas mobile banking is limited to transfering fund after registering the number with the bank
48. What are payment systems ?
Ans : fund transfer mechanism to transfer mechanism from one bank to another bank is called payment
system. for e.g. RTGS, NEFT,ECS,NPCI, N SWIFT etc.

OR A system which makes transaction to be effected b/w a payer and a beneficiary. Ex- rtgs, neft etc
49. Why do banks declare dividends ?
Ans : Dividend is a part of profit earn by organisations in current year. After profit netting dividend is distributed
to its share holder nd govt of india have majority stake in it so tht PSB give dividend to govt of india
50. What do you understand by Merchant Banking ?
Ans : It is the combination of Consulting along with Banking services. In simple words directing the customer
abt the right investment and doing banking busimess with that is called Merchant banking
OR A combo of banking + consultancy services(like,,financial,,legal,,managerial,,marketing ) is k/a merchant
banking.
51. Why do PSB present dividend cheques to central government ?
Ans : After profit netting dividend is distributed to its share holder nd govt of india have majority stake in it so tht
PSB give dividend to govt of india
52. Do you know Banks are supposed to observe prudential norms. What are these norms ?
Ans : Prudential Norms for Conversion of Unpaid Interest into 'Funded Interest Term
53. Now-a-days we are listening a word - "BASEL-III"
Could you just tell what is this BASEL-III and is their any other Basel version ? If yes, then what is the
difference ?
Ans : Basel is city in switzerland n also the headquarter of BIS Bureau of international settelment. main
objective of basel is safety ,solvence n soundness of the banking system controlling of redit risk , market risk n
operational risk. in 2010 basel 3 guidelinesis released. These guidelines are introduced in response to financial
crisis of 2008.India deadline to migrate to basel 3 is 31 march 2019.
54. What is stress testing in banks ?
Ans : It is a test performed in a bank to analyse wheather a bank has sufficient capital to overcom d impact of
adverse economic condition. it can b done intrnally by bank as a part of ots operation risk or may be done by
the supervisory authority as a part of their Regulatory function.
OR It is a tool to determine the capacity of commercial banks to safeguard their working from different risks
and it is most important part to check the financial soundness of banks
55. Bank's additional means of earnings is fee based income. What does it mean ?
Ans : - As banks generate income from Interest from different lending. Now banks started earning from these
para banking services. Some example are :
A) Transaction charges on remittance of funds
B) Locker service
C) Letters of credit
D) Bankassurance
E) Bills business
56. Bank's main source of revenue is interest income. What is it ?
Ans : - Difference b/w lending rate and borrowing rate of banks is the real income of banks.
OR Overall income = Income earned from interest on loans - Interest paid on savings
57. What is the Board for Financial Supervision ?
Ans : BFS was set up in 1994 to oversee the indian financial system, comprising not only commercial
bank,state cooperative bank but also all india financial institution and NBFC . BFS has full time vice chairman
and 6 other member apart from RBI governar as its chairman.
58. Do you know about IBA . What role does it play ?
Ans : IBA stands for Indian Banking Association
Present chairman Mr. TM bashin
It is an association of Bankers of India and comprises of 22 banks

it works in area of development coordination and strengthening Indian banking system and assist members in
implementation of new system and adoption of standards among members
Recently it is playing a crucial role in Negotiating Wage Hike for Bankers
59. Five functions of RBI ?
Ans : 5 Functions of RBI a ) Banker to bank
b ) Banker to central government
c ) Currency issuer
d ) Forex regulator
e ) Monetary policy maker
60. What is the difference between EXIM Bank and Commercial banks ?
Ans : A) Exim banks was estd with a purpose to boost export by providing all required assistance like info
regarding foreing markets risks associated with, financing project/trade. while commercial banks main job is
providing bankin services to individual and corporate
B) EXIM BANK - It is an apex bank established mainly for boosting international trade of country, by providing
financial assistance through lending loans either by self or with collabaration with commercial banks
Commercial Banks - Banks which play a crucial role in Economic sector as they provide banking services to
every individual of country
C) Banking is accepting the demand deposit with the purpose of lending. This is called commercial bank work
bcoz it earn profit.
EXIM bank is a development financial bank which is established with the purpose of developments of foreign
market finance, information nd training nd risk mitigation of exporters by providing financing.
61. What is Kiosk Banking ?
Ans : It is self-service solutions, allowing customers to service themselves with computer based touchscreen and
making different sort of transactions.
62. What is Retail Banking ?
Ans : Retail banking is when a bank executes transactions directly with consumers, rather than corporations
or other banks. Services offered include savings and transactional accounts, mortgages, personal loans, debit
cards, and credit cards.
63. What are the significance of Bank Deposits ?
Ans : For bank: essential for passing loans and to generate income and strengthen the economy stability in
particular environment
64. What is CASA ?
Ans : - current account and saving account.......it refers to demand deposits of a bank
65. Deposit Accounts are classified under two categories. What are those categories ?
Ans : 1 DEMAND DEPOSIT 2. TERM DEPOSIT
66. What is KYC?
Ans: Know Your Customer launched to stop anti money laundering activities.
67. What do you know about Current accounts ? Any specific difference between Current and savings
accounts ?
Ans : Current acnt basically businesses men ke lie hote h no. Of withdrawl n deposit pr no restrictions n no
interest s provided on deposits. And saving s fr common people whose aim s to save no. Of withdrawls s fixed
n interest s provided on deposits

68. What is Recurring deposits ? What is the difference between RD and FD . Which is more beneficial for
bank and why ?
Ans : RD me ap har month ek fixed amount jama karte h ek fix time k liye...(aaj kal amount varible RD b hoti h)
...FD is better thn RD coz FD me bank ko ke heavy amount initially mil jata h...which is usefull for giving loan...
69. Renewal of Deposits. Could you just give some light on it ?
Ans : Its is applied on RAFA...in which u renew the matured amount for a new time period
70. What do you understand by Premature payments ?
Ans: Payments which are made before the due date or maturity date.
71. Which documents are required to open an account ?
Ans : according to kyc guideline issued by rbi... 1-current photograph 2- photo id 3- address proof
OR Photo Id..add proff..photo...introducer well known to bank...peron has to present at the time of opening a
acc
72. Who insure bank deposits ? Any norms by insuring body ?
Ans : Dicgc(subsidiary of rbi) insures bank deposits each depositor in a bank is insured upto a maximum of
Rs.1,00,000
73. What is meant by Accounts of HUF ?
Ans : This is the account for hindu undivided fmly.this account is maintained by karta(who is head of
family).karta has power to raise loan for family business .he is empowered to do all kind of activities on behalf
of family but he cannot enter into patnership business.after karta demise coparcener can take powers of karta
74. Difference b/w retail and wholesale banking ?
Ans : Retail banking : its main focus is on individual whereas wholesale banking focus on corporates and big
customer ,
In Retail , size of loan is small and also recovery in retail banking is very difficult whereas in wholesale banking
, size of loan are big and recovery can be possible with various DRTs
In Retail banking, large network is needed to cater customer base, while in WB its not needed in that large.
75. Do Banks open Pension accounts ?
Ans : YES
76. What are Dormant Accounts ?
Ans : Those account which are not in use for 2 or more than 2 year are considered as dormant accounts..
77. Explain money laundering activities.
Ans: A set of procedures, laws or regulations designed to stop the practice of generating income through illegal
actions. In most cases money launderers hide their actions through a series of steps that make it look like
money coming from illegal or unethical sources was earned legitimately.
78. Why is interest not paid in current accounts ?
Ans : Because charge lgta h unlimited transcation pr..to interest to vse hi pura ho jata h..& ca is not for saving
purpose

79. Can insolvent persons open accounts ?

Ans : NO

80. What is TDS on bank interest ?

Ans : Interest earned on bank term deposits is subjected to TDS if the interest amount > stipulated limit
announced in the financial year