Banker Interview Questions: Getting a job in any banking sector isn’t an easy job. They require someone with the right academic qualifications, sincerity, aptitude, responsibility & dedication. Moreover, you also need to have experience if it’s the entry-level post that you are applying for. Job at banking services gets more bank interview questions & answers which clears an interview panel.
This blog contains some of the common questions that you will likely be asked by the panel during an interview. Thus, when asked any of these questions, you will have the correct answer to give.
Banker Interview Questions and Answer 2022
Q1. What’s a bank and what are the kinds of banks?
Answer: A bank refers to a financial institution that’s licensed like a receiver of money deposits. The types of banks include investment banks and commercial banks. In other countries, banks can be regulated by a central bank and the national government.
Q2. What’s a commercial bank?
Answer: It’s owned by some group of people or by some member of the Federal-Reserve-System. The commercial bank provides services to people. They’re primarily involved with getting deposits & lending to businesses. This kind of bank earns cash by imposing interest on the loan to the borrowers. Money that’s deposited by a customer is utilized by banks to offer business loans, mortgages, auto loans & home repairs.
Q3. What’s a consumer bank?
Answer: This is a new addition to the banking sector. This kind of bank exists just in U.S.A & Germany. These banks offer loans to the customer for them to purchase T.V, furniture, Car, etc. & offer the option of simple payment via installment.
Q4. What’s investment banking?
Answer: This manages portfolios of monetary assets, currency & commodity, fixed income, corporate consultative services for mergers, corporate finance & acquisitions, debt plus equity writing.
Q5. What are the various ways one can control accounts?
- Branch or Over counter service
- Mobile or Telephone banking
- Internet banking
- Automated Teller Machine (ATM)
Q6. What’s ‘Crossed Cheque’?
Answer: It indicates an amount that should be placed into the payee’s account & cannot be cashed through the bank over a counter.
Q7. What’s the prime rate?
Answer: It’s the interest rate that’s determined by the nation’s biggest banks for their desired customers, having the best credit score. Abundant ‘variable’ interest relies on ‘prime rates’. For instance, the Annual Percentage Rate on the credit card is 10 percent plus prime rate. If the prime rate is 3 percent, the current Annual Percentage Rate on the credit card will be 13 percent.
Q8. What’s overdraft protection?
Answer: This is a service that is offered by banks to the customer. For example, if you’re holding two accounts, credit and saving account, in a similar bank. If any of the accounts don’t have sufficient cash for processing the cheque or for covering the purchases. Bank will move money from any of the accounts to the other one, which doesn’t have cash. This helps in preventing check return or clearing your electricity or shopping bills.
Q9. What’s ‘balloon payment’?
Answer: This is the last lump sum payment that is due. When the whole loan payment isn’t amortized over the life of the loan, the other balance is due at the last repayment to the lender. Balloon payment happens within a fixed-rate mortgage of flexible rate.
Q10. What’s the ‘cost-of-debt’?
Answer: This is when an organization borrows money, from a bank (financial institution) or other resources and the interest paid at that amount is referred to as ‘cost-of-debt’.
Q11. What’s Negative Amortization?
Answer: This when the repayment of a loan is less compared to the loan collected interest, a negative Amortization happens. It increases the loan total instead of reducing it. It’s also understood as ‘deferred interest’.
Q12. What’s adjustment credit?
Answer: This refers to a short-term loan which is made by the Federal Reserve Bank to a commercial bank in maintaining reserve requirements & support short-term lending when they’re less of cash.
Q13. What’s the concern which you’ve about operating in banking?
Answer: My major concern is work-life balance because I like spending more time with my family as probable. This is the reason working for the company that is located in Sydney, will be the best for me.
Q14. If a client isn’t convinced about this bank, how will you convince him/her?
Answer: With this question, the interviewers ask to assess the sales skills that you have. He also wants to see how convincing you are. Like any other personal banker, one needs to be capable to describe the ability to sell financial services. Allow your interviewer understands the way you plan to find what products & services are suitable for customers & how you will introduce them. Demonstrate to the panel that you know what it takes to successfully make some sales.
Q15. What’s ‘Loan grading’?
Answer: This grouping of the loan depending on different dangers & parameters including the borrower’s credit history, repayment risk, etc. The system puts loans on one to six categories, depending on stability & danger linked with a loan.
Q16. What’s ‘Cheque Discount’?
Answer: This is a service that’s offered just by a selected few banks. For example, if you’ve got a cheque with the value of $3000 outstation & the cheque takes seven days of clearance, then the bank will provide you an early payment service. The bank makes an early payment, though they will pay just a particular percentage of the actual amount, here they’ll give you $2000 but they’ll charge interest at it & the outstanding $1000 will be given, when an outstation cheque is cleared
Q17. What are the different kinds of Loans provided by Commercial Banks?
Line of Credit: This is a kind of business loan offered by commercial banks. It’s more of security for one’s business; the bank enables the customer to take away the amount from gladly available funds at an adverse period. Company or Customer pays back every time & withdraw money minus moving through the loan process.
Start-Up Loans: This kind of loan is provided to the borrower for starting their business & can be utilized in building a storefront, obtaining inventory, or give franchise fees to attain a business rolling.
Small Business Administration: This is a Federal Agency that offers loans to entrepreneurs and small businesses. Small Business-Administration loans are processed via banks, lenders that partner with Small Business-Administration, and credit unions.
Q18. What are various kinds of loans provided by banks?
Answer: The various kinds of loans provided by banks include
- Secured Personal Loan
- Mortgage Loans
- Unsecured Personal Loan
- Auto Loans
- Small business Loans
Q19. What’s a Payday loan?
Answer: This is generally, a little amount & a short-term loan which is available at a more interest rate. A borrower should compose post-dated cheques to a lender concerning the amount they prefer to borrow.
Q20. What does ‘LIBOR’ mean?
Answer: ‘LIBOR’ is a short form for London Inter-Bank Offered-Rate. This is a normal interest rate provided for U.S-dollar or Euro dollar placed between collections of London banks. This is an international interest rate that follows world-economic conditions & uses a base rate through banks to establish an interest rate. Moreover, LIBOR comes with eight maturities overnight in about 12 months & five distinct currencies. One time in a day LIBOR pronounces the interest rate.
Q21. Explain what is payroll cards?
Answer: These are kinds of smart cards provided by banks in facilitating salary payments between the employer & employees. Via payroll card, the employer loads payments to the employee’s card, & the employee will be able to withdraw salary even though he/she does not have an account in a bank.
Q22. What are various kinds of accounts available in a bank?
Answer: The kind of banks accounts includes:
Money Market: This bank account offers both advantages of savings account & checking accounts. One will be able to withdraw the amount & can earn more interest in it. This kind of account can be opened with the lowest balance.
Checking Account: With this account kind, you will be able to access an account just like a saving account. However, saving an account, one won’t get interested in the account. The advantage of opening a checking account type, there is no withdrawal limit.
Saving Account: One will save more money in this kind of account & earn interest with it. The amount of withdrawal is restricted & requires to maintain less amount balance in the account to be active.
Certificate of Deposit: With this kind of account, you’ve to deposit the money for a fixed period like 5 years or 7 years, & you’ll earn interest on it. The interest rate will be determined by the bank, & you can’t withdraw funds until the fixed period is over.
Q23. What are the kinds of Commercial Banks?
Business or corporate banking: This kind of commercial banking deals with underwriting, cash management, financing & providing stocks & bonds.
Consuming or retail: It’s small to a midsize branch that deals directly with consumer’s transactions instead of other banks or corporate.
Securities & Investment: This kind manages debt & equity writing, financial assets portfolios, corporate finance, commodity & currency, fixed income, etc.
Non-traditional Options: This kind contains numerous non-banks entities which provide financial services similar to that of the bank. Its entities are comprised of credit-card companies, credit-card issuers, and credit-card report agencies.
Q24. How banks do gets a profit?
Answer: Bank earns income in different ways. Some include.
- Accepting deposit
- Interest spread
- Extra charges at services like online payment, account maintenance, etc.
- Banking Value-chain
- Offering funds to borrowers at interest
Q25. What’s ACH?
Answer: ACH is a short form of Automated Clearing House. It’s an electronic funds transfer between financial and banks institutions.
Q26. What’s co-maker?
Answer: This is a person that signs a note to offer loan payment on behalf of a major loan applicant.
Q27. What’s the inter-bank deposit?
Answer: An inter-bank deposit is any deposit that’s held by a single bank for a different bank. The bank where the deposit is held it’s known as a correspondent bank.
Q28. What’s ‘Credit-Netting’?
Answer: This is a system that reduces the number of credit checks at a financial transaction. Such agreement happens between big banks & other institutions of finance. This is a place where all the current and future transactions into a single agreement, eliminating the requirement for credit cheques at every transaction.
Q29. What do you understand by the term ‘foreign draft’?
Answer: It refers to a substitute of foreign currency; it’s normally utilized to send money to a foreign country. This is purchased from commercial banks, & they’ll charge depending on banks rules & norms. Individuals opt for ‘foreign draft for sending money as the way of sending money is safer & cheaper. It also allows receivers to access funds faster compared to cash transfers or cheques.
Q30. What’s Convertibility Clause?
Answer: For loans, there’s a provision for borrowers to vary interest amounts from variable to fixed & vice versa.
With these questions, you will have gained some courage because you will have an idea of what may be asked. Proper preparation before an interview will gain your confidence hence you will be halfway successful with the process.