IBPS Clerk Interview
question and Answer
Q1. Why you
want to join as a Clerk with technical degree?
i. Make sure
your looks realistic and at the same time coveys your willingness to join bank
sector.
ii. If
questioned about your degree (MBA/MCA/ M.SC/ MTech) mention about the uncertain
future of private sector, compared to high growth witnessed in banking sector.
Q2. Aren’t
you overqualified for clerk post?
Let them
know that how your degree can help in banking sector and also relate your
answer with future growth.
Q3. Why
Government job?
i. A
government job provides job security and commands much more respect in society
than a private job.
ii. By any
chance, if some of your relates, parents etc are associated with a government
job or bank; you should cite the example of such cases and mention that you
have seen these people and they have been your inspiration.
Note: Never
answer in a openly manner “I did not get any other job, or I need job at any
cost, There is a lot of pressure in private sector”. You would be countered
with more questions.
Q4. What is
a nationalized bank?
Ans: Banks
which are owned and run by government of India are called as nationalized
banks.
Example:
Canara bank, syndicate bank, Vijaya bank, etc..,
There are
total 21 nationalized banks at present.
Bhartiya
Mahila Bank is a new nationalized bank which starts operation in November.
Private
bank: Banks which are owned and run by individuals are called private banks.
Example: karnataka bank, karurvysya bank, lakshmivilas bank etc..,
Foreign
banks: Banks which are foreign originated [based] are called foreign banks
Example: Citi bank, HSBC bank.
Q5. What is
RBI [Reserve Bank of India], when it is established and what are its functions?
Ans: RBI
established in 1935 and Nationalized in 1949 and its head office in Mumbai.
Present Governor of RBI “ Raghuram Rajan”.
Its
functions:
1. Issues
currency notes
2. Acts as
bankers bank
3. Maintains
foreign exchange reserves
4. Maintains
CRR and SLR
Note: RBI is
also called as "bankers bank", because all banks will have a/c's with
RBI. It provides funds to all banks hence it is called as BANKERS BANK.
Q6. What are
the Open Market Operations (OMOs)?
Ans: OMOs
are the market operations conducted by the Reserve Bank of India by way of
sale/ purchase of Government securities to/ from the market with an objective
to adjust the rupee liquidity conditions in the market on a durable basis.
For Ex: When
the RBI feels there is excess liquidity in the market, it resorts to sale of
securities thereby sucking out the rupee liquidity. Similarly, when the
liquidity conditions are tight, the RBI will buy securities from the market,
thereby releasing liquidity into the market.
Q7. Types of
accounts in banks?
Ans.
- Savings
bank account [SB a/c]: The main purpose of SB a/c is to encourage small savings
from the public. Interest paid on SB a/c is 4 percent.
- Any
individual can open SB a/c. An Indian residing at abroad can open a NRI a/c.
NRI represents non-resident Indians.
- Current
account: It’s a running and active account. No interest is paid on current a/c.
- Current
accounts can be opened on firm names. Even individuals can also open current
a/cs. But on firm names you cannot open SB a/c.
- Fixed
Deposit account: Amount is kept for a fixed period. Higher rate of interest
will be paid on this a/c.
- Recurring
deposit [RD a/c]: A fixed amount can be deposited in monthly installments.
Interest rate is same as fixed deposits.
Q8. What is
Unclaimed Deposit Account?
Ans: Those
saving or current accounts which have not been operated upon for 10 years or
more, as at the end of each calendar year.
Q9. What is
Inoperative /Dormant Account?
Ans: A
savings as well as current account should be treated as inoperative / dormant
if there are no transactions in the account for over a period of two years.
Q10. What is
BSBDA Account (BASIC SAVING BANK DEPOSIT):
Ans: Under the guidelines issued on
August 10, 2012 by RBI: Any individual, including poor or those from weaker
section of the society, can open zero balance account in any bank. BSBDA
guidelines are applicable to "all scheduled commercial banks in India,
including foreign banks having branches in India". All the accounts opened
earlier as 'no-frills' account should be renamed as BSBDA. Banks are required
to convert the existing 'no-frills' accounts’ into 'Basic Savings Bank Deposit
Accounts'.
The 'Basic
Savings Bank Deposit Account' should be considered as a normal banking service
available to all customers, through branches.
The aim of
introducing 'Basic Savings Bank Deposit Account' is very much part of the
efforts of RBI for furthering Financial Inclusion objectives.
Q11. What is
Cheque?
Ans. Cheque
is a negotiable instrument containing conditional order to pay sum of money to
the person mentioned on it or to the bearer of the instrument.
- Crossing on
Cheque: Two parallel lines drawn on the top left corner of the cheque.
- Account
payee cheque: Account payee cheques can be routed only through accounts.
- Post dated
cheque: The date on the cheque beyond today’s date then cheque becomes post
dated.
- Stale
cheque: Cheque is valid for 3 months. If the date on the cheque is before 3
months, then the cheque becomes stale cheque.
- Mutilated
cheque: It is a damaged cheque.
- At Par
cheque: It is payable anywhere in India.
- Multi city
cheque: A cheque which is payable in any branch of a particular bank.
Q12. What is
Demand Draft:
Ans: A demand draft is an instrument used for effecting transfer of
money. It is a negotiable instrument.
Difference
b/w a Cheque and a demand draft:
- A cheque
is issued by an individual whereas a demand draft is issued by a bank.
- A cheque
is drawn by an account holder of a bank, whereas a draft is drawn by one branch
of a bank on another branch of the same bank.
- In a
cheque, the drawer and the drawee are different persons. But in a draft both
the drawer and the drawee are the same bank.
- A cheque
is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has
not be precisely defined in the NI Act.
- A Cheque
can be dishonored for want of sufficient balance in the account. Whereas a
draft cannot be dishonoured.Hence there is certainty of the payment in the case
of a demand draft.
- Payment
of a cheque can be stopped by the drawer of the cheque, whereas, the payment of
a draft cannot be stopped.
- A
cheque can be made payable either to a bearer or order. But a demand draft is
always payable to order of a certain person.
Q13. What is
Cheque Truncation?
i.
Truncation is the process of stopping the flow of the physical cheque issued by
a drawer at some point with the presenting bank en-route to the drawee bank
branch.
ii. In its
place an electronic image of the cheque is transmitted to the drawee branch by
the clearing house, along with relevant information like data on the MICR band,
date of presentation, presenting bank, etc.
iii. Cheque
Truncation speeds up the process of collection of cheques resulting in better
service to customers, reduces the scope for clearing-related frauds or loss of
instruments in transit, lowers the cost of collection of cheques, and removes
reconciliation-related and logistics-related problems, thus benefitting the
system as a whole.
Q14. What is
Repo rate?
Ans. The
rate at which RBI lends money to commercial banks is known as Repo Rate.
Repo Rate at
present: 8%
Reverse Repo
rate: Reverse repo rate is the rate at which the central bank of a country
(Reserve Bank of India in case of India) borrows money from commercial banks
within the country. It is a monetary policy instrument which can be used to
control the money supply in the country.
Reverse Repo
rate: 7%
15. What is
CRR and SLR?
Ans.
CRR:
Cash Reserve Ratio – It is the ratio of physical cash that every bank has to
keep with RBI.
Current CRR
– 4%
SLR:
Statutory Liquidity Ratio – It is the ratio of liquid assets that every bank
has to keep with RBI.
Current SLR
– 23%
Need of SLR:
With the SLR, the RBI can ensure the solvency of a commercial banks. It is also
helpful to control the expansion of the Bank credits. By changing SLR rates,
RBI can increase or decrease bank credit expansion. Also through SLR, RBI
compels the commercial banks to invest in the government securities like govt.
bonds.
Main use of
SLR: SLR is used to control inflation and propel growth. Through SLR rate the
money supply in the system can be controlled effectively.
Q16. What is
Marginal Standing Facility (MSF):
i.MSF rate
is the rate at which banks borrow funds overnight from the Reserve Bank of
India (RBI) against approved government securities.
ii. This
came into effect in may 2011. Under the Marginal Standing Facility (MSF),
currently banks avail funds from the RBI on overnight basis against their
excess statutory liquidity ratio (SLR) holdings.
iii.
Additionally, they can also avail funds on overnight basis below the stipulated
SLR up to 1 per cent of their respective Net Demand and Time Liabilities (NDTL)
outstanding at the end of second preceding fortnight.
Why (MSF) is
it required: Banks borrow money from RBI at MSF rate when there is an acute
cash shortage or acute asset-liability mismatch. This does not carry any
stigma. Size of MSF: Minimum amount of Rs. One crore and in multiples of Rs.
One crore thereafter.
Q17. About
KYC norms?
Ans: The
full form of KYC is – Know Your Customer KYC guidelines was introduced by – RBI
for all banks in the year – 2002
The
components of KYC – Identity proof , address proof , photographs
The
objective of KYC guidelines is – to prevent banks from criminal money
laundering activities
KYC day is
celebrated on – First working day of august every year
Q18. About
BASE RATE :-
The minimum interest rate of a bank below which it cannot lend to
public
The BPLR
(Benchmark prime lending rate)was introduced in the year – 2003 The BPLR was
converted into base rate on – july 2010 RBI made mandatory for all banks to
introduced w.e.f. – 1July 2010, The minimum base rate is fixed by – RBI
Q19. What is
CBS (Core Banking Solutions)?
Ans: Core Banking Solutions is the process, where
branches of the bank are connected to a central host and the customers of
connected branches can do banking at any breach with core banking facility.
Advantages
for both to the customers & the banks:
Customer:
i.
Transactions of business from any branch.
ii. Lower
incidence of errors.
iii. Better
funds management due to immediate availability of funds.
Banks:
i. Better
customer service.
ii.
Availability of accurate data.
iii.
Increased business volume with better asset liability management and risk
management.
Q20. What is
Inflation?
Ans. It is a
state where money looses the value hence prices will go up (or) Decreasing the
value of money.
Q21. What is
Deflation?
Ans. It is
opposite to inflation. Money will have more value. Here the products looses the
value.
Q22. What is
Credit card?
Ans. Credit
card is a plastic instrument that can be used for the purchase of goods and
services. You can buy the services and then pay the cash to the bank. Limits
will be fixed based on the net worth of the customer. Leading credit cards:
VISA, MASTER.
Q23. What is
NEFT & RTGS?
NEFT
(National Electronic Fund Transfer): NEFT enables funds transfer from one bank
to another but works a bit differently than RTGS. NEFT is slower than RTGS. The
transfer is not direct and RBI acts as the service provider to transfer the
money from one account to another. You can transfer any amount through NEFT,
even a rupee. There is no Minimum & Maximum Limit in NEFT.
Need of
NEFT: We can use this facility if we want to transfer funds online in a day or
two. NEFT can make life easier for those who need to send money to their
parents or children living in another city. It cuts the trouble of issuing a
cheque or draft and posting it. It can also be done through internet banking.
RTGS (Real
time gross settlement ): RTGS system is funds transfer systems where transfer
of money or securities takes place from one bank to another on a "real
time" and on "gross" basis.
Minimum
& Maximum Limit of RTGS: 2 lakh and no upper limit.
In an RTGS
system, transactions are settled across accounts held at a Central Bank on a
continuous gross basis. Settlement is immediate, final and irrevocable (which
cannot be changed or reversed).
Q24. What is
NPA?
Ans. NPA:
Non Performing Asset: When a loan becomes bad then it becomes NPA.
Q25. What is
online banking?
Ans. Nothing
but any where banking. A customer can operate his account from any branch of a
particular bank.
Q26. What is
a currency chest?
i. To
facilitate the distribution of banknotes and rupee coins, the Reserve Bank has
authorised select branches of scheduled banks to establish Currency Chests.
ii. These
are actually storehouses where banknotes and rupee coins are stocked on behalf
of the Reserve Bank. As on June 30, 2006, there were 4428 Currency Chests and
4102 Small Coin Depots.
iii. The
currency chest branches are expected to distribute banknotes and rupee coins to
other bank branches in their area of operation.
Q27. What is
Online or Internet Banking?
Ans: The
accessing of bank information, accounts and transactions with the help of a
computer through the financial institution's website on the Internet is called
online banking. It is also called Internet banking or e-banking
Q28. What
are soiled, mutilated and imperfect banknotes?
(i)
"soiled note:" means a note which, has become dirty due to usage and
also includes a two piece note pasted together wherein both the pieces
presented belong to the same note, and form the entire note.
(ii)
Mutilated banknote is a banknote, of which a portion is missing or which is
composed of more than two pieces.
(iii)
Imperfect banknote means any banknote, which is wholly or partially,
obliterated, shrunk, washed, altered or indecipherable but does not include a
mutilated banknote.
Q29. What
are the various types of financial markets?
The
financial markets can broadly be divided into money and capital market.
A. Money
Market: The money market provides investment avenues of short term tenor. Money
market transactions are generally used for funding the transactions in other
markets including Government securities market and meeting short term liquidity
mismatches.
By
definition, money market is for a maximum tenor of up to one year. Within the
one year, depending upon the tenors, money market is classified into:
i. Overnight
market or Call money - The tenor of transactions is one working day.
ii. Notice
money market – The tenor of the transactions is from 2 days to 14 days.
iii. Term
money market – The tenor of the transactions is from 15 days to one year.
B. Capital
Market: Capital market is a market for long-term debt and equity shares.
In this
market, the capital funds comprising of both equity and debt are issued and
traded. This also includes private placement sources of debt and equity as well
as organized markets like stock exchanges.
Q30.
Commercial Paper (CP)?
Ans:
Commercial Paper (CP) is an unsecured money market instrument issued in the
form of a promissory note.
Corporate,
primary dealers (PDs) and the all-India financial institutions (FIs) that have
been permitted to raise short-term resources under the umbrella limit fixed by
the Reserve Bank of India are eligible to issue CP.
Period: CP
can be issued for maturities between a minimum of 7 days and a maximum up to
one year from the date of issue.
Q31.
Certificate of Deposit (CD)
Ans:
Certificate of Deposit (CD) is a negotiable money market instrument and issued
in dematerialized form or as a Usance Promissory Note, for funds deposited at a
bank or other eligible financial institution for a specified time period.
Period:
Banks can issue CDs for maturities from 7 days to one a year whereas eligible
FIs can issue for maturities 1 year to 3 years.
Q32. What is
EMV based card payments?
Ans: EMV
stands for Europay, MasterCard and Visa, a global standard for inter-operation
of integrated circuit cards (IC cards or "chip cards") and IC card
capable point of sale (POS) terminals and automated teller machines (ATMs), for
authenticating credit and debit card transactions.
It is a
joint effort initially conceived between Europay, MasterCard and Visa to ensure
the security and global interoperability of chip-based payment cards
Q33. What is
Bhartiya Mahila Bank (BMB)?
Ans.Bhartiya Mahila Bank is an Indian financial services banking company
based in New Delhi, India.India's Prime Minister Manmohan Singh inaugurated the
system on 19 November 2013 on the occasion of the 94th birth anniversary of
former Indian Prime Minister Indira Gandhi.
Headquarter
– New Delhi. Bank will get an initial capital of Rs 1,000 crore.
Usha
Ananthasubramanian – The First CEO/Chairperson of Bhartiya Mahila Bank
Q34.
Financial inclusion: Financial inclusion means providing sound and affordable
financial services to the "unbanked”, those who do not have access to the
formal financial system.
Financial
inclusion is more than an economic issue - it is a legal and regulatory reform
process.
35. What is
Bancassurance: The sale of insurance and other similar products through a bank.
This can help the consumer in some situations; for example, when a bank
requires life insurance for those receiving a mortgage loan the consumer could
purchase the insurance directly from the bank.
Q36. What is
IFSC (Indian Financial System Code)?
i. Indian
Financial System Code is an alpha-numeric code that uniquely identifies a
bank-branch participating in the NEFT system.
ii. This is
an 11 digit code with the first 4 alpha characters representing the bank, The
5th character is 0 (zero).and the last 6 characters representing the bank
branch.
iii. IFSC is
used by the NEFT system to identify the originating / destination banks /
branches and also to route the messages appropriately to the concerned banks /
branches.
Q37. What is
MICR?
Ans.MICR stands for Magnetic Ink Character Recognition. MICR Code is a numeric
code which uniquely identifies a bank branch participating in the ECS Credit
scheme. MICR code consists of 9 digits e.g 400229128
i. First 3
digits represent the city (400)
ii. Next 3
digits represent the bank (229)
iii. Last 3
digits represent the branch (128) The MICR Code allotted to a bank branch is
printed on the MICR band of cheque leaves issued by bank branches.
Q38. What is
Balance of Trade: The value of a country’s exports minus the value of its
imports. Unless specified as the balance of merchandise trade, it normally
incorporates trade in services, including earnings (interest, dividends, etc.)
on financial assets.
Balanced
Trade: When a balance of trade equal to zero. (exports – imports = 0)
Q39. What is
Balance of Payments: A list of all of a country’s international transactions
for a given time period, usually one year. Payments into the country (receipts)
are entered as positive numbers, called credits; Payments out of the country
(payments) are entered as negative numbers called debits. A single numbers
summarize all of a country’s international transactions: the balance of
payments surplus.
Q40. What is
Balance Sheet: A financial statement that summarizes a company's assets,
liabilities and shareholders' equity at a specific point in time. These three
balance sheet segments give investors an idea as to what the company owns and
owes, as well as the amount invested by the shareholders.
The balance
sheet must allow the following formula: Assets = Liabilities + Shareholders'
Equity
Q41. What is
Fiscal Deficit: A deficit in the government budget of a country and represents the
excess of expenditure over income. So this is the amount of borrowed funds
require by the government to meet its expenditures completely.
Q42. What is
Direct & Indirect Tax: A direct tax is that which is paid directly by
someone to taxing authority. Income tax and property tax are an examples of
direct tax. They are not shifted to somebody else.
Indirect
Tax: This type of tax is not paid by someone to the authorities and it is
actually passed on to the other in the form of increased cost. They are levied
on goods and services produced or purchased. Excise Tax, Sales Tax, Vat,
Entertainment tax are indirect taxes.
Q43. What is
NOSTRO & VOSTRO Account: A Nostro account is maintained by an Indian Bank
in the foreign countries.
VOSTRO
Account: A Vostro account is maintained by a foreign bank in India with their
corresponding bank.
Q44. SDR
(Special Drawing Rights): SDR are new form of International reserve assets,
created by the International Monetary Fund in 1967. The value of SDR is based
on the portfolio of widely used countries and they are maintained as accounting
entries and not as hard currency or physical assets like Gold.
Q45. What is
CRAR(Capital to Risk Weighted Assets Ratio): Capital to risk weighted assets
ratio is arrived at by dividing the capital of the bank with aggregated risk
weighted assets for credit risk, market risk and operational risk.
Q46. What is
Government Bonds?
Ans: A
government bond, which is also known as a government security, is basically any
security that is held with the government and has the highest possible rate of
interest.
Q47. What is
FDI & FII?
FDI: Foreign
direct investment (FDI) is a direct investment into production or business in a
country by an individual or company of another country, either by buying a
company in the target country or by expanding operations of an existing
business in that country. Foreign direct investment is in contrast to portfolio
investment which is a passive investment in the securities of another country
such as stocks and bonds.
FII: Foreign
institutional investors (FIIs) are those institutional investors which invest
in the assets belonging to a different country other than that where these
organizations are based.
Note:
Foreign institutional investors play a very important role in any economy.
These are the big companies such as investment banks, mutual funds etc, who
invest considerable amount of money in the Indian markets. With the buying of
securities by these big players, markets trend to move upward and vice-versa.
They exert strong influence on the total inflows coming into the economy.
Difference
b/w FDI & FII:
- FDI or
Foreign Direct Investment is an investment that a parent company makes in a
foreign country. On the contrary, FII or Foreign Institutional Investor is an
investment made by an investor in the markets of a foreign nation.
- In FII,
the companies only need to get registered in the stock exchange to make
investments. But FDI is quite different from it as they invest in a foreign
nation.
- FDI is
more preferred to the FII as they are considered to be the most beneficial kind
of foreign investment for the whole economy.
- The
Foreign Institutional Investor is also known as hot money as the investors have
the liberty to sell it and take it back. But in Foreign Direct Investment, this
is not possible. In simple words, FII can enter the stock market easily and
also withdraw from it easily. But FDI cannot enter and exit that easily. This
difference is what makes nations to choose FDI’s more than then FIIs.
- While the
FDI flows into the primary market, the FII flows into secondary market. While
FIIs are short-term investments, the FDI’s are long term.
Q48. Aware
about RBI recent move to withdraw all currency notes issued before 2005?
The Reserve
Bank of India decided to withdraw all currency notes issued prior to 2005,
including Rs 500 and Rs 1,000 denominations, after March 31 in a move
apparently aimed at curbing black money and fake currencies.
How can you
distinguish such type of notes?
The public
can easily distinguish the currency notes issued before 2005 as they do not
have the year of printing on reverse side. The year of printing in a small font
is visible at the middle of the bottom row in notes issued after 2005.
Summary:
- Aimed at
curbing black money and fake currencies.
- Banks will
accept pre-2005 notes for exchange from April 2014.
- From 1
July 14 banks will demand identity and residence proof to exchange more than 10
notes.
- Notes will
be acceptable until further instructions from the RBI
- Most fake
currencies are based on pre-2005 design.
- Post-2005
notes have additional security features.
- Banks will
get only 25% of the value from RBI for turning in Fakes.
- Banks will
have to report transaction of over Rs 10 lakh to authorities.
- Total
value of currency in circulation Rs 11,68,800 crore.
- Value of
pre-2005 notes could be in tens of thousands of crores.
Q49. What
Are Bitcoins?
Ans: The
Bitcoin is a form of currency without notes and coins, it is a digital
currency. In this era of Internet and digitization, we’ve moved from phone to
VoIP calls, face-to-face meeting to video conferencing, fax to email, cable
television to IP TV, and the list goes on.
The concept
of Bitcoins was developed by Satoshi Nakamoto and belongs to Japan.
The world’s
first insured bitcoin storage service has launched in the UK (London).
Q50. What is
Basel Norms ?
Bureau of
International Settlement (BIS) headquarters at Basel, Switzerland has appointed
a committee to supervise and to set some standards for International Banks.
This committee is known as Basel Committee on Bank Supervision (BCBS). The
rules and regulations for Banks issued by this committee were called Basel
Norms / Accords. There are three Basel Norms, namely Basel I, II and III.
Basel I
Accord : This was issued in 1988. This accord focused on the capital adequacy
of financial institutions. Banks that operate internationally are required to
have a risk weight of 8% or less. India adopted Basel I Norms in the year 1999.
Basel II
Acord : This is the second of the Basel Accords, published in the year 2004.
This consists of the recommendations on Banking Laws and Regulations issued by
BCBS.
Basel III
Accord : Basel III guidelines were released in the year 2010. This is to
enhance the banking regulatory framework. It builds on the Basel I and Basel II
documents and seeks to improve the banking sector's ability to deal with
financial and economic stress, improve risk management and strengthen the
banks' transparency
