Banking has always been a preferred career choice for many. However, the selection procedure of banks is a tough nut to crack for both freshers as well as experienced professionals. Apart from the right academic qualifications, dedication, and aptitude, it requires the right approach and thorough preparation to clear a banking interview.
Here we have compiled a list of seven important bank interview questions to help you prepare for your next bank interview.
1. What do you think are the most important needs of the banking industry in the constantly changing banking scenario?
As an experienced banking professional, you should do some homework beforehand about the banking environment in general and the current business practices and the marketing strategies adopted by banks. An appropriate answer to this question would be on the lines of how digital and technological innovations are changing the ways business is done including the banking transactions. Considering this, banks need to step up their game and offer various avenues for digital distribution and multichannel optimisation.
2. Tell us about the concept of adjustment credit?
This is a frequently asked interview questions from experienced bankers. You need to clearly explain that adjustment credit is a short-term loan made by the Federal Reserve Bank (U.S) to the commercial bank in order to maintain reserve requirements and support short-term lending in case of the cash crunch.
3. Explain the term (APR) Annual Percentage Rate?
APR is the abbreviated form of Annual Percentage Rate. It is the interest that the bank charges to their customers for using services like credit cards, loans, etc. Since the interest rate or fees imposed is calculated annually, it is called APR.
4. Share your views on changing role of the banking sector?
This is one of the common questions asked in banking interviews to both beginners as well as experienced bankers. The interviewer is trying to understand your approach and thought process here. To be able to answer this question, you should regularly follow the developments in the banking industry. To answer this, explain that other than important functions such as mobilising the savings of the individuals and organisations for investments in different sectors of the economy, banks also promote regional development in the country by providing funds and essential financial infrastructure for sustained economic development.
5. What do you mean by the term ‘LIBOR’?
As a banking professional, you must know the various terminologies used in the sector such as CRR, SLR, CAD, MSF etc. Here you need to elaborate on ‘LIBOR’ which is the abbreviated form of the London Interbank Offered Rate. LIBOR is used as a base rate by banks to set the interest rate and it follows the world economic condition. In simpler terms, it is an average interest rate offered by the banks for U.S Dollar or Euros deposited between groups of London banks and it comes in 8 maturities from overnight to 12 months and in 5 different currencies.
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6. Explain the difference between FII and FDI?
Investment related questions are quite commonly asked at banking interviews and you need to be thoroughly prepared for these. Be clear and concise while explaining the difference here. Mention that while the FDI (foreign direct investment) is an investment that a parent company makes in a foreign country, FII (Foreign Institutional Investor) is an investment made by an investor in foreign nation markets. Another difference is the fact that unlike FDI, FII can enter & exit the stock market easily. This is due to the fact that FDI only targets a specific sector.
7. What is your understanding of base rate?
Such types of questions are asked to check your understanding of the essential banking concepts. Here you need to clearly explain that base rate is the minimum rate of interest which a bank has to charge from its customers. Banks cannot sanction loans below the base rate except in case of government-sponsored schemes and staff & agriculture loans.
Apart from these, some of the other essential banking questions asked at interviews include:
a. Why did you decide to make a career in banking?
b. Explain the difference between nationalized banks and private banks?
c. What are REPO and Reverse REPO rate? Explain with examples.
d. Have you ever had to face a conflict situation with a customer? How did you control the situation?
e. What would you do to make an angry customer stay with your bank?
f. List down the functions of RBI.
g. Can you give an example of a person you think has integrity and explain why?
h. What is a fiscal deficit? Explain.
i. Describe a situation in which you made a mistake and had to admit it to peers?
j. Explain the terms CRR and SLR?
While it is natural to get a little nervous during the Interview, the key here is to have a positive attitude and put your best foot forward. Your job here is to convince the recruiter that you have the right set of skills, knowledge, and experience they are looking for in a candidate.
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