Commercial bank is owned by the group of individuals or by a member of Federal Reserve System. The commercial bank offer services to individuals, they are primarily concerned with receiving deposits and lending to business. Such bank earns money by imposing interest on the loan borrowed by the borrower. The money that is deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans.
d) CD (Certificate of Deposits) Account: In such account you have to deposit your money for the fixed period of time (5-7 years), and you will earn the interest on it. The rate of interest is decided by the bank, and you cannot withdraw the funds until the fixed period expires.
Before opening a bank account, if it is a saving account, you have to check the interest rate on the deposit and whether the interest rate remains consistent for the period. If you have the checking account, then look for how many cheques are free to use. Some banks may charge you for using paper cheques or ordering new cheque books. Also, check for different debit card option that is provided on opening an account and online banking features.
Overdraft protection is a service that is provided by a bank to their customer. For instance, if you are holding two accounts, saving and credit account, in the same bank. Now if one of your accounts does not have enough cash to process the cheques, or to cover the purchases. The bank will transfer money from one account to another account, which does not have cash so to prevent check return or to clear your shopping or electricity bills.
Basically, ‘prime rate’ is the rate of interest that is decided by nations (U.S.A) largest banks for their preferred customers, having a good credit score. Much ‘variable’ interest depends on the ‘prime rates’. For example, the ‘APR’ (Annual Percentage Rate) on a credit card is 10% plus prime rate, and if the prime rate is 3%, the current ‘APR’ on that credit card would be 13%.
Both are used for the transfer of the amount between two accounts of same banks or different bank. ‘Cheque’ is issued by an individual who holds the account in a bank, while ‘Demand draft’ is issued by the bank on request, and will charge you for the service. Also, demand draft cannot be cancelled, while cheques can be cancelled once issued.
Foreign draft is an alternative to foreign currency; it is generally used to send money to a foreign country. It can be purchased from the commercial banks, and they will charge according to their banks rules and norms. People opt for ‘foreign draft’ for sending money as this method of sending money is cheaper and safer. It also enables receiver to access the funds quicker than a cheque or cash transfer.
A credit check or a credit report is done by the bank on a basis of an individual’s financial credit. It is done in order to make sure that an individual is capable enough of meeting the financial obligation for its business or any other monetary transaction. The credit check is done keeping few aspects in concern like your liabilities, assets, income etc.
It is a letter of credit or a contractual agreement between financial institute (Bank) and the party to which the letter is handed. The ILOC letter cannot be cancelled under any circumstance and, guarantees the payment to the party. It requires the bank to pay against the drafts meeting all the terms of ILOC. It is valid upto the stated period of time. For example, if a small business wanted to contract with an overseas supplier for a specified item they would come to an agreement on the terms of the sale like quality standards and pricing, and ask their respective banks to open a letter of credit for the transaction. The buyer’s bank would forward the letter of credit to the seller’s bank, where the payment terms would be finalized and the shipment would be made.
Home equity loan, also known as the second mortgage, enables you to borrow money against the value of equity in your home. For example, if the value of the home is $1, 50,000 and you have paid $50,000. The balance owed on your mortgage is $1, 00,000. The amount $50,000 is an equity, which is the difference of the actual value of the home and what you owe to the bank. Based on equity the lender will give you a loan. Usually, the applicant will get 85% of the loan on its equity, considering your income and credit score. In this case, you will get 85% of $50,000, which is $42,500.
Line of credit is an agreement or arrangement between the bank and a borrower, to provide a certain amount of loans on borrower’s demand. The borrower can withdraw the amount at any moment of time and pay the interest only on the amount withdrawn. For example, if you have $5000 line of credit, you can withdraw the full amount or any amount less than $5000 (say $2000) and only pay the interest for the amount withdrawn (in this case $2000).
The date on which the principal amount of a loan becomes due and payable is known as ‘Loan Maturity’. Yield is commonly referred as the dividend, interest or return the investor receives from a security like stock or bond, interest on fix deposit etc. For example, any investment for $10,000 at interest rate of 4.25%, will give you a yield of $425.
‘LIBOR’ stands for London Inter-Bank Offered Rate. As the name suggest, it is an average interest rate offered for U.S dollar or Euro dollar deposited between groups of London banks. It is an international interest rate that follows world economic condition and used as a base rate by banks to set interest rate. LIBOR comes in 8 maturities from overnight to 12 months and in 5 different currencies. Once in a day LIBOR announces its interest rate.
Lines of credit are another type of business loan provided by commercial banks. It is more like a security for your business; the bank allows the customer to withdraw the amount from readily available funds in an adverse time. Customer or Company can pay back over time and withdraw money again without going into the loan process.
‘Bill Discount’ is a settlement of the bill, where your electricity bill or gas bill is sold to a bank for early payment at less than the face value and the bank will recover the full amount of the bill from you before bill due date. For example, electricity bill for XYZ is $1000; the electricity bill company will sell the bill to the bank for 10% to 20% discount to the face value. Here, the bank will buy the electricity bill for $900 whose face value is $1000, now the bank will recover, full amount of bill from the customer i.e $1000. If the customer fails to pay the bill, the bank will put interest on the outstanding bill and ask the customer for the payment.
In ‘Bill Purchase’ the loan will be created for the full value of the draft and the interest will be recovered when the actual payment comes. For example, a ‘Sight draft’ is presented for which the loan is created for 100% of the draft value. The money is received after 7 days, and then the interest will be recovered for 7 days along with the principal amount.
Cheque discounting service is offered only by few banks. For instance, if you have a cheque of $3000 outstation and the cheque will take 7 seven days for clearance, then bank will offer you a service for early payment. The bank can make an early payment, but they will pay only for certain percentage of the actual amount, here they will pay you $2000 but they will charge interest on it and the remaining $1000 will be paid, once the outstation cheques get clear.
- Tell me a little bit about yourself.
- What is your greatest strength and your greatest weakness?
- Where do you see yourself in five years?
- How did you hear about our company?
- What about our job listing caught your attention and made you believe this was a job you would be interested in?
BANKING Interview Questions And Answers! How To Pass A Retail Bank Interview!
Prepare for bank customer service interview questions
You are likely to be asked some interview questions that explore your understanding and approach to customer service. These bank interview questions and answers for customer service will help you prepare and stand out as strong job candidate.
Top 21 Banking Interview Questions and Answers are:
Question 1: Brief me about yourself?
Answer: It is the first fundamental question that every interviewer asks a candidate to start the conversation and know about the person. So, always be positive and introduce yourself starting with your name, qualification and all the other required information that is important for an interviewer to know. Just complete it within 2 minutes so that it should not be extended as a boring conversation.
Question 2: Why do you want to join the banking sector?
Answer: In this question, be logical and answer it by telling why banking sectors have influenced people with all the facts and figures, ready as to why the banking sector is the fastest-growing sector. Do not start by telling that you want to have a stable career or some personal view. Just make it well versed which can form a correct opinion of your answer.
Question 3: What are the types of accounts in a bank?
Answer: Be straight forward and start your answer by telling the information which can match the question asked by an Interviewer. The types of accounts in banks are:
Question 4: What are the necessary documents a person requires to open an account in a bank?
Answer: As per the RBI advised banks to follow the Know Your Customer (KYC) guidelines where the bank obtains some personal information of the account holder. The primary document that is needed to open an account are photographs, proof of identity proof like Aadhar card or Pan Card etc., and address proof as well.
Question 5: What are the types of Commercial Banks?
Answer: The types of Commercial Banks are:
Question 6: What is the annual percentage rate (APR)?
Answer: APR is known as the Annual percentage rate. It is a charge or interest that the bank imposes on their customers for using their services like loans, credit cards etc. The interest is calculated annually.
Question 7: What is Amortization and negative amortization?
Answer: Amortization refers to the repayment of the loan by instalment to cover principal amount with interest whereas, negative amortization is when the repayment of the loan is less than the loans accumulated interest, then negative amortization takes places.
Question 8: What is the debt to income ratio?
Answer: Debt to income ratio is calculated by dividing a loan applicant’s total debt payment by his gross income.
Question 9: What is loan grading?
Answer: Loan grading is the classification of the loan based on various risks and parameters like repayment risk, borrowers credit history etc. The system places a loan on one to six categories, based on the stability and risk associated with the loan.
Question 10: What do you mean by Co-Maker?
Answer: A person who signs a note to guarantee the payment of the loan on behalf of the main loan applicant’s is known as Co-maker or signer.
Question 11: What is the line of credit?
Answer: Line of credit is an agreement between the bank and a borrower, to provide a certain amount of loans on borrower’s demand. The borrower can withdraw the amount at any moment and pay the interest only on the amount withdraw.
Question 12: How banks earn a profit?
Answer: The bank earns profit in various ways:
Question 13: What is the payroll card?
Answer: Payroll cards are types of smart cards issued by banks to facilitate salary payments between employer and employees. Through payroll card, the employer can load salary payments onto an employee’s smart card, and employee can withdraw the salary even though if he or she doesn’t have an account in the bank.
Question 14: What is the card-based payment?
Answer: There are two types of card payments:
Question 15: What is a Payday loan?
Answer: A Payday loan refers to a small amount and a short term loan available at the high-interest rate.
Question 16: What is a charge off?
Answer: Charge off is a declaration by a lender to a borrower for non- payment of the remaining amount when borrower badly falls into debt. The unpaid amount is settled as a bad debt.
bank interview questions
Dont just regurgitate easy to find information in the public realm. Do make sure you do in-depth research – recruitment advisors suggest talking to existing employees so that you can use specific information about what its like to work for that firm. We provide a list of other information sources here.
Equity financing is less risky (you wont have to pay it back). Youll have more cash on hand. You wont have to channel profits into loan repayment. Your equity investors will have a longer term view. Your company will have more credibility. And you might get to tap your investors network to help you develop the business.
WACC is the weighted average cost of capital. To calculate it, you need to multiply the cost of each capital component (common stock, preferred stock, bonds and any other long-term debt) by its proportional weight and take sum of the results. WACC shows the average rate of return a company needs to compensate all its different investors. Click here for advice on how to calculate it.
“Unfortunately, people dont always bother doing the most basic research on the company,” says the head of recruitment at one international bank. “Whats really needed here is something that explains why you think the bank youre applying for is different to and better than the rest.” Youll need to research every bank youre interviewing with, he says. Your answers need to be specific: you need to find something that makes the bank stand out and to go with that. In the case of Nomura, for example, you might say you want to work for a bank with strong Asian connections so that you have exposure to the Asian market.
When it comes to recruitment, banks are notoriously fussy. B Their application process is also notoriously convoluted: you can expect digital interviews, psychometric test games, individual interviews and Superdays/Assessment centres. Along the way, youll be quizzed about your motivation, technology and “fit” (personality). At every stage of the process, you might get dinged. So, how can you prepare?
