IBPS Examinations Tips for Interview for recruitment as clerks and officers in banks e-book

IBPS Examinations

Tips for  Interview for recruitment as clerks and officers in banks

e-book

Prepared by:

A. Gauri Sankar, 39/G/1/ Ayya Flats, Dhandeeswaram Nagar, Second Cross Street, Sixth Main Road, Velachery, Chennai 600042 – gausan51@gmail.com

IBPS bank examination

Tips for  Interview for recruitment as clerks and officers in banks

The purpose of interview:

The purpose of any interview is to select suitable person for the concerned post. The person to be interviewed may be having better qualifications; however, he may not be having better communication ability, leadership quality and lacking in interpersonal relationship. Banking demands people who are willing to work hard by mingling with customers freely and friendly and moving with their colleagues in an amicable manner.

Phases of the interview:

The interview is conducted in four phases namely;

·         the first phase during the course of which questions are asked about the person and his specialization;

·          the second phase wherein questions are asked about the bank for whom the interview is conducted;  

·         the third phase wherein questions on general banking and finance and latest developments are asked.

·         The fourth phase is closing the interview

The interview committee:

The interview committee consists of three imminent personalities

·         The first member analyses the body language of the individual

·         The second member studies the answering ability of the individual

·         The third member judges about the capability of the individual for the post

The main purpose of posing the questions is to provoke the candidate emotionally, intellectually thereby pressurizing him to come out with appropriate replies available in his mind.

The interview process:

The interview process consists of the following:

·         Completion of certificate verification and paper work;

·         Waiting for the turn at the waiting hall;

·         Entering interview room after seeking permission of the members;

·         Thanking the interviewer who allowed the candidate inside the cabin;

·         Sitting on the seat offered;

·         Thanking the person who had offered the seat;

·         Shaking the hands of the members if offered;

·         Attending the interview maintaining eye contact with the interviewers;

·         Collecting all certificates and documents after the interview is over;

·         Thanking the interviewers

·         Walking out calmly and closing the door slowly

Dress code:

·         Dress code is more important and a person is judged by the dress he wears.

·         For men: Please wear a neat trouser and full length shirt – preferably white or light shaded; Using “T” shirts will dampen your image and do not opt for “T” shirts. Wear a good quality shoes neatly polished. If possible you can wear a “tie” – this is purely optional and in northern parts of the country persons wearing “tie” is considered to be dynamic and proactive.

·         For girls: Under any circumstances do not wear provoking dress namely; “T” shirts; jeans pants; trousers and shirts with messages and blouses with low cuts. A neat chudithar is considered to be the best and wearing sarees improves the image of the individual.

Questions during the first phase:

·         Initially the candidates are invited to tell about themselves, their family members, their ambitions, their qualifications, their achievements in studies, sports, music and other extra curricular activities;

·         The second question is about the place to which  the candidate belongs. In case the candidate belongs to Kanchipuram, he will be asked to tell about Kanchipuram and the positive points, if any,  about the place. Necessarily the candidate should have a thorough knowledge about the place from which he is hailing;

·         The interviewers will pose “ice breaking questions” in order to shift the focus of the candidate. This is for the purpose of finding out the reaction of the candidate during such “focus change”. (Banks demand people who are able to meet any challenges);

·         During the first two to three minutes, more than 80 percent of the questions will be on the personal biodata and information  about the candidate. It has to be remembered that – “ The first impression is the best impression”.

Sample questions during the first phase:

·         Tell something about yourself (You should inform about yourself, your family, your qualification, achievements etc. in a crisp manner. Unnecessary explanation should be avoided)

·         I see – you are from Tiruchirapally – please tell me about Tiruchirapally: Tell about Tiruchi – the river Kaveri; Rock temple; Sri Rangam, Samayapuram and many more;

·         You had studied in Presidency college. Why you preferred this college. How was your life in the college?

·         You had studied “EEE”  - why you chose the course?

·         You had mentioned your surname as “Kavirayar” – what is the reason?

·         You are in Chennai for the past one year. What is your opinion about Chennai?

·         You are having “EEE” in engineering and why do you prefer banking? (Your reply should be – In fact by working in bank, I can develop my relationship with customers, improve my knowledge and serve many people)

·         What are your strengths and weaknesses? – Your answer: I am always willing to work hard under all circumstances;  I have good communication ability and I shall surely develop friendship with colleagues, clients and others  in a fast manner so that I can work better.

·         You are highly qualified having MBA and engineering degree – what is the guarantee that you will be in our bank for many years? (The reply should not be: On account of unemployment problem I am joining your bank; Your reply should be – even though I have good qualifications, I wish to work in the bank because I can have better opportunities to serve the society than any other institutions)

(The candidate should do a home work – he should analyse his strength, weaknesses and positive points; during the course of the interview he should avoid negative reply or angry reply under any circumstances; when provoked or tempted the candidate should remain calm and smile pleasingly during such occasions)

The following question may provoke the candidate –

·         You had dressed like Surya – do you think that you are Surya?

(Your reply should be– In fact I am his fan and I used to see many of his films since his films contain good messages which are useful for life)

Second phase of the interview process:

During this phase, questions will be asked about the bank for which the candidate is appearing for the interview and the following are some sample questions:

·         Do you know – where is the head office of Canara Bank?

·         Who is the present chairman of the bank?

·         How many branches Canara Bank is having as on date?

·         Can you tell me about the total business of the bank?

·         Why Canara Bank is named after Canara?

·         Can you tell me about some deposit schemes available in the bank?

·         What do you know about the logo of Canara Bank?

·         What is the punchline of Canara Bank?

Third phase of the interview:

During this phase, questions will be asked about general banking practices as follows:

·         Have you visited any bank branch? What is your experience ?

·         What is the business of any bank?

·         What are the prime functions of any bank?

·         What are the secondary functions of any bank?

·         Who can open a savings bank account?

·         What do you know by KYC guidelines?

·         What is the difference between Current account and Savings account?

·         Who normally opens current account?

·         What do you know by fixed deposit account?

·         Can a company can open a savings account?

·         Can the director of a company can open a savings account?

·         Who is the controlling authority for the banks in India?

·         What is a foreign bank?

·         What is meant by public sector bank?

·         Which is the largest private sector bank in the country?

·         Which is the largest bank in the country?

·         You are working as an officer in savings department. The customer complains about the irritating behavior of the clerk who is working under you. What you will do in this situation?

·         Your manager delegates some work and you are failing in doing the work within the allotted time and your manager is not happy with your performance. How you will convince your manager?

·         Today there is a news about monetary credit policy. What do you know by that?

·         What do you know by reverse repo?

·         What is called as inflation?

·         What is rupee convertibility?

·         What do you know by gross domestic product?

·         What do you know by ASBA?

·         What do you know by Sensex?

·         What do you know by a convertible debenture?

·         What is initial public offer?

·         What do you know by facebook – whether it is good for any individual and what is your opinion?

(The above questions are illustrative and not exhaustive and the candidate should know fairly well about many banking aspects)

The fourth phase of the interview:

Like the initial phase or first phase – this fourth phase is also important wherein tricky questions will be asked as mentioned below:

·         You are hailing from Tiruchirapalli. In case you are posted to Chennai whether you will be willing to work in Chennai. (Your answer: If I am posted at Tiruchirapalli, I can do justice to the bank as well as the family members who are dependant on me)

·         Suddenly on account of computer crash, you have to sit late – whether you will be willing to sit late and finish the job or leave early without informing your superiors? (Definitely I will never mind in sitting late and I will always cooperate with my manager in finishing the day to day functions of the branch)

·         What are you willing to tell about you? ( If I am selected, I shall work hard and I shall discharge my duties to the entire satisfaction of my superiors. I will do always the best from my side)

 QUESTION BANK – PART 001

01. What are the functions of any bank? – The bank accepts deposits from the public and lends loans to the public. Acceptance of deposits and lending loans are called as the primary functions. The secondary functions are – selling gold coins, insurance products and mutual fund products. Apart from the above, the banks open demat accounts also.

02. What do you know by demand deposits? – Current account and savings accounts are called as demand deposits. Current account is opened for business purpose carrying no interest and savings deposit is opened for the purpose of saving the money and it carries interest. The interest is at present decided by respective banks.

03. What do you know by KYC guidelines? – KYC means Know your customer guidelines. According to KYC, the bank demands address proof and identity proof from the public when they open accounts with the bank. For address proof, copes of ration card, voter ID card, AATHAAR card, telephone bill etc. are obtained. For identity proof, copies of identity card issued by the employers, voter ID card, driving licence, AATHAAR card etc. are obtained by the bankers.

04. What do you know by term deposits? – Fixed deposits, recurring deposits and reinvestment deposits are called as term deposits since these deposits are opened for some specific period. The minimum period for which the term deposit is opened – 7 days and the maximum period: 10 years. Interest is paid according to the period of deposit. Interest is decided by the respective banks only.

05. What do you know by fixed deposit? – Fixed deposits are opened for a minimum period of seven days and maximum period of ten years. Interest is paid according to the period of deposit. In this scheme, a lump sum amount is deposited for a fixed period and interest earned is obtained from the bank on quarterly basis. In case the customer demands, interest is paid by the bank on monthly or  fortnightly basis.

06. What do you mean by recurring deposit? – According to this scheme, the customer can remit monthly or quarterly a  fixed amount for a fixed period. For example, an amount of Rs. 1000/- can be deposited for 60 months and interest is paid to the depositor according to the period of deposit along with the principal amount on maturity of deposit.

07. What do you know by reinvestment deposit? – Reinvestment scheme is nothing but fixed deposit. Instead of getting the interest on fixed amount on monthly or quarterly basis, the customer can  get the interest on maturity along with principal amount. Since interest is reinvested, the customer is eligible to get interest for interest also.

08. What do you know by PAN number? – PAN number is required for IT purposes and when more than Rs. 50000/- is invested in time deposit accounts or remitted in current or savings deposit accounts, the customer has to mention the PAN number in the remittance slips.

09. Whether deposits can be opened in the name of minor? – Yes, deposits can be opened in the name of minors. The accounts are opened in the name of minor duly represented by father and mother and they are called as natural guardians. When the minor is a student and aged more than ten years, he can operate the account himself. For this purpose, he should produce a certificate from the headmaster or principal of the school where he is studying.

10. Whether minor is eligible for loans ?– Loans should not be granted to minors as per law and as per law the loans granted to the minors cannot be demanded legally.

11. What do you know by PIN number? – PIN number is a four digit number used when the customer operates automated teller machines. The PIN number consists of four digits and instead of PIN number, thumb impressions are recorded in biometric ATMs

12. What do you know by bank nationalization? – As much as fourteen banks owned by private entrepreneurs were nationalized on 19.7.1969 so that they can meet social obligations. During the second phase, six banks were nationalized on 15.4.1980. New Bank of India got merged with Punjab National Bank and as at present there are twenty public sector banks including IDBI bank.

13. What do you know by foreign bank? – Foreign banks have their headquarters in a foreign country; however, they have branches in India as permitted by Reserve Bank of India.

14. What do you know private sector banks? – At present there are fourteen old private sector banks in our country and seven new private sector banks namely; Axis bank Limited, Development Credit Bank Limited, HDFC Bank Limited, ICICI Bank Limited, Indus Ind bank Limited, Kotak Mahindra Bank Limited and Yes bank Limited. According to the revised norms fixed by Reserve Bank of India, the new private sector banks should have a minimum capital base of Rs. 200 crore.

15. What do you know by central bank? Central bank is the bank which governs other banks in the country. In our country RBI is the central bank. It has its headquarters at Mumbai and the following are the functions of RBI namely – currency note issue, banker to the banks, financial adviser to the government, custodian of cash reserves of banks, lender of the last resort and controller of credits etc.

16. What do you know by issue of currency notes in the country? In our country, up to one rupee note and coins, Government of India undertakes to issue and currency notes and coins valuing more than one rupee are issued by Reserve Bank of India. 

17. What do you know by scheduled commercial banks? – The public sector banks, SBI and its subsidiaries, all private sector banks, foreign banks and Regional Rural Banks are called as scheduled commercial banks. They should have been included in the second schedule of RBI act 1934; got licence for conducting banking business as per Banking Regulation act, 1949 and should have been incorporated either as per companies act or cooperative act.

18. What do you know by commercial banks? – Commercial banks are banks which function for profit and the following banks are included under the category of commercial banks by RBI – State Bank and its subsidiaries, all nationalized banks including IDBI bank, all private sector banks and foreign banks. The cooperative banks and regional rural banks are not treated as commercial banks.

19. What do you know by cheque book? Cheque books are issued when the customer is having current account, savings deposit account or overdraft account. Cheque books are issued for the purpose of withdrawal of money from the account. Cheques are not issued in the case of term deposits namely; fixed deposit, reinvestment deposit and recurring deposit. In the case of term deposits, the customers are issued with deposit receipts mentioning therein the details of deposits.

20. What do you know by minimum balance? – When a customer is maintaining current account and savings account, he should maintain minimum balance in the account. The minimum balance is prescribed by the respective banks. When the amount falls below the minimum balance during any day, penal charges are levied in the account.

21. What do you know by automated teller machines? – Automated Teller Machines are used for the purpose of allowing the customer to withdraw money twenty four hours a day using ATMs. The following services are available through automated teller machines namely – cash withdrawal, balance enquiry, mini statement up to last ten entries, pin number change, mobile recharge, e-ticketing, transfer of funds etc.

22. What do you know by TDS? TDS is called as tax deducted at source. When a customer having a fixed deposit account or reinvestment deposit account earns interest amount more than Rs. 10000/- tax is deducted at source from the account according to income tax laws prevalent in the country.

23. What do you know by core banking solution? According to core banking solutions, all branches of the bank are interconnected through a common server and a customer can transact the business in his account from anywhere in the country.

24. What do you know by real time gross settlement? _ According to RTGS, a customer can send money more than Rs. 200000/- from his account to any other account of another person having his account with the branch of the same bank or any other bank. For example, a customer having an account with Canara Bank, Kellys branch at Chennai can transfer the amount to the account of his father with State Bank of India, Canning Street, Kolkatta. Banks charge normal service charges for the remittance facility.

25. What do you know by either or survivor? – When more than one individual opens an account it is called as a joint account. Since the account is opened jointly by more than one person, the account holders should specify the conditions for operation of the account to the banker. In the case of E or S account, anyone of the customers can operate the account individually. In the case of joint accounts having the condition: “operation jointly”, all accountholders should operate the accounts jointly.

26. What do you know by safe deposit locker? – It is a facility provided by the bank for safekeeping the valuable articles. Lockers are available in different sizes and according to the size of the locker, charges are collected for the lockers. The lockers are operated by the locker holder and the banker and for this purpose, the customer is given one key pertaining to the locker  and the banker is having the master key for the entire unit.

27. What do you know by nomination facility in the account? Nomination facility is available for  deposit accounts namely; current account, savings account, fixed deposit, reinvestment deposit account and recurring deposit account. The customer nominates a person for the account to receive money on the death of the depositor.

28. What do you know by safe custody service? – According to the scheme for safe custody service, customers can safe keep their valuables with the banker for nominal service charges. The valuables are kept in sealed packets or bundles and handed over to the banker and the banker on receipt of the packet or bundle, furnishes a receipt and when the customer is in need of the packet or bundle, he has to produce the receipt to the banker.

29. What do you know by proprietorship account? When a customer maintains an account in his personal name, it is called as individual account and when he opens an account in the name of a firm owned by him, it is called as proprietorship account. For example, Balaji conducting a printing press can open an account in the name of Balaji Printing services and this is a proprietorship account opened for business purposes and Balaji  is called as proprietor.

30. What do you know by partnership account? When more than one person joins together to conduct a business, it is called as a partnership firm and the partners invest the capital either equally or according to the terms as agreed between the partners. The rules and regulations of the business are recorded in partnership deed. The partnership deed can be registered or non registered.

31. What do you mean by crossing of the cheque? – When two parallel transverse lines are drawn on the face of the cheque, it is called as crossing. When two simple transverse lines are drawn, it is called as general crossing and when the name of a banker is mentioned between the two parallel lines, it is called as special crossing.

32. What is the purpose of crossing of the cheque? – Cheques are crossed so that they should  be encashed through accounts only. This is to avoid fraudulent encashment of the cheques by miscreants.

33. What do you know by order cheque? Normally the cheques are payable to the person mentioned in the cheque or to the bearer. In the case of uncrossed bearer cheque, the person named in the cheque or any bearer can get payment of the cheque from the bank counter. When the words,  “bearer” are  cancelled, the cheque is treated as order cheque and for encashing an order cheque, the customer has to prove his identity to the banker.

34. What do you know by shares? – For the purpose of building fixed capital, joint stock companies are authorized to issue shares to the public. Shares can be issued in the form of ordinary shares or preference shares. Ordinary shareholders are entitled to vote during the annual general body meeting and they do not have any predetermined dividend amounts and in the case of preference shareholders, they are paid dividend according to predetermined rates.

35. What do you know by Debentures ?: It is a sort of loan document. Those who advance loans to the company are called as debenture holders. Normally debentures are issued through initial public offer as in the case of shares. Predetermined rate of interest is paid to the debenture holder, whether the corporation earns profit or suffers loss.

36. What do you know by SEBI? It is the principal regulator in the capital market in the country – both the primary and secondary segments. It has also been conferred with the powers to regulate the mutual funds and venture capital funds in the country.

37. What do you know by call money? It is an important segment of the Indian Money Market. Under call money market, funds are transacted on overnight basis and under notice money market, funds are transacted for the period between 2 days and 14 days. Banks borrow in this market, in order to fill the gaps or temporary mismatches in funds; to meet the cash reserve ratio and statutory liquidity ratio and to meet sudden the demand  for funds arising out of large outflows. Banks, primary dealers, development finance institutions, insurance companies and select mutual funds are participants in this market.

38. What do you mean by Treasury bill?: They are money market instruments to finance the short term requirements of the Government of India. There are different types of treasury bills based on the maturity period and utility of the issuance like, adhoc treasury bills, three months, six months and 12 months treasury bills etc.

39. What do you know by call money? – Call or notice money is an amount borrowed or lent on demand for a very short period. If the period is greater than one day and up to 14 days, it is called as notice money; otherwise the amount is known as call money. Cooperative banks, commercial banks and primary dealers are allowed to borrow and lend in this market for adjusting their cash reserve requirements.

40. What do you know by certificate of deposits? – It is a negotiable short term promissory note in nature. It is issued at a discount to the face value, the discount rate being negotiated between the issuer and the investor.

41. What do you know by commercial paper? – Commercial papers are negotiable short term unsecured promissory notes with fixed maturities, issued by well rated organizations. These are generally sold on discount basis. Organisations can issue commercial papers either directly or through banks or merchant banks called as dealers.

42. What do you know by primary market? – Primary market deals with new securities – it can be otherwise called as new shares issued to the public. The new offerings by the companies are made through an initial public offer or rights issue of shares to the existing shareholders

43. What do you know by secondary market/stock market? – It is the market for buying and selling securities of the existing companies. Under this scheme, securities are traded and being initially offered to the public in the primary market and/or listed on the stock exchange. The secondary market dealings are done through the share brokers in the stock markets situated in various cities in the country.

44. What do you know by the term called as savings bank ? – It is a financial institution whose primary purpose is to accept savings deposits. It may also perform some other functions. These banks are much helpful for salaried people and low income groups. The deposits collected from customers are invested in bonds, securities etc.

45. What do you know by commercial banks? – It is an institution which accepts deposits, makes business loans and offers related services. The commercial banks also allow for a variety of deposit accounts, such as checking, savings and time deposits. Their main purpose is to make a profit. Commercial banks apart from acceptance of deposits and lending loans provide services like collection of cheques and bills of exchanges, remittance of money from one place to another place etc.

46. What do you know by industrial banks and development banks? – They are development banks engaged in promotion and development of industry. SIDBI is a development bank engaged in helping industries in getting loans from public sector and other banks. NABARD caters to the needs of agriculture and National Housing Bank is meant for helping housing development. EXIM bank helps for import and export development in the country.

47. What do you know by indigenous banks? – Indigenous banks mean money lenders and sahukars. They collect deposits from the general public and grant loans to the needy persons out of their own funds as well from deposits. They are much popular in villages and small towns.

48. What are the different types of loans provided by banks? – Cash credits, overdrafts, loans and advances, discounting of the bill of exchange and investment in government securities are various loan facilities provided by any bank. Cash credits are loans granted against stock of goods. Overdrafts are clean loans granted in current accounts. The other loans are housing loans, educational loans, consumer loans, gold loans, other agricultural loans,  industrial loans etc. .

49. What do you know by debit card?- They are cards issued by the banks on current and savings accounts. Using debit cards the customers can withdraw funds using automated teller machines or they can purchase goods through point of sale terminals situated at textile shops, petrol pumps, hotels and other outlets. The card can be also used for purchasing e-tickets, air tickets and many more.

50. What do you know by credit card? – Credit cards are post paid cards whereas the debit cards on the other hand is a prepaid card with some stored value. Every time, a person uses this card, the internet banking house gets money transferred to its account from the bank of the buyer.

51. What do you know by stale cheque?- When the cheque becomes out of date and cannot be encashed, it is termed as stale cheque. For example, the validity period of any cheque is three months and when a cheque dated: 10.01.2012 is presented for payment on 10.01.2013, it is considered as a stale cheque, since the cheque is more than three months old.

52. What do you mean by post dated cheque?- When the date of the cheque is beyond the date on which the cheque is presented for payment, the cheque is considered to be post dated. For example, when a cheque dated: 10.02.2013 is presented for payment on 10.01.2013, it is considered to be a post dated cheque.

53. What do you know by currency chest? – Currency chests are operated by RBI so that they can provide good quality currency notes to the public. However, RBI has appointed commercial banks to open and monitor currency chests on behalf of RBI. The cash kept in currency chests is considered to be kept in RBI.

54. What is meant by minimum balance to be maintained in the accounts? In the case of savings bank and current account deposits, the banks stipulate a minimum balance to be maintained. The minimum balance varies from bank to bank and when the balance in the account falls below the minimum balance then banks debit the account with some penal charges. Some banks insist quarterly average minimum balance to be maintained instead of regular minimum balance to be maintained.

55. What do you mean by tax deduction at source? TDS means tax deducted at source. Banks must deduct tax from the interest paid on the fixed deposit when the interest paid on fixed deposits to a customer exceeds Rs. 10000/- during the accounting year. TDS is applicable to fixed deposits only and is applicable to savings bank deposits.

56. What do you mean hindu undivided family? – HUF means Hindu Univided family and it is the legal entity duly recognized by the laws in India. The account of hindu undivided family is operated by Karta and karta is the seniormost male member in the family. The remaining members in the family are called as coparceners. Banks can open deposit accounts and also extend loan facilities to hindu undivided family.

57. What do you know by MICR? – MICR means magnetic ink character recognition. Nowadays, the cheques are issued in MICR formats in metropolitan centres namely; Mumbai, Chennai, Kokatta, Bangalore etc. The micr code is readable by a reader sorter computer which helps in quick sorting of the cheques towards immediate adjustment of the amount to be received and paid by the banks in the clearing house. MICR code consists of the following namely; the cheque number, name of the city, name of the bank, name of the branch, account category etc. and banks simply type the amount of the cheque in the MICR portion using scanners so that the sorter reader is able to read the entire information in regard to the cheque instantaneously.

58. What do you mean by cheque truncation? – Under cheque truncation, the physical cheque is replaced by the digital image of the cheque after scanning. Once the cheque is truncated the physical cheque is cancelled and from the moment of truncation only the digital image has life. The digital image of the cheque which contains the digital signature of a bank officer as to its authenticity is processed by all banks and payment is effected. Cheque truncation helps in quick processing of the cheques drawn even on far away places since there is no necessity to physically move the cheque from one place to another place.

59. What do you mean by ECS?- ECS means electronic clearing service and this facility is used where a large number of small value payments or receipts are to be made or received. ECS can be used for either debit transactions or credit transactions. When a company wants to pay dividends to large number of shareholders, they use ECS credit facility and by debiting the company’s account, the shareholders accounts are credited with the dividend amount instantaneously. Similarly when an accountholder can use ECS debit facility towards effecting payment to telephone charges each month.

60. What do you mean by bankassurance? Hitherto banks were dealing with acceptance of deposits and lending loans to the customers apart from undertaking certain ancillary services. Nowadays banks started selling insurance policies of prominent insurance companies by having tie up arrangements with such companies and banks earn commission for such transactions.

61. What do you mean by Universal banking? – Universal banking is the concept under which banks can provide various types of services namely; deposits, loans, safe deposit lockers, safe custody services, dealing with mutual fund schemes, selling insurance policies, selling gold coins, dealing with issue of shares and debentures etc. Thus at present banks are functioning like a supermarket for all kinds of financial products and such concept is called as universal banking.

62. What do you mean by Regional Rural Banks? – The Regional Rural Banks are relatively new banking institutions which were added to the Indian banking system since October, 1975. The distinctive feature of a rural bank is that though it is a separate body corporate with perpetual succession and common seal, it is very closely linked with the commercial bank which has sponsored the proposal to establish it.

63. What do you mean by National Housing Bank?- National Housing Bank was established under the National Housing Bank act, 1987 as an apex body and the key function of National Housing Bank is the development of the housing sector and it is a wholly owned subsidiary of Reserve Bank of India. National Housing Bank undertakes the following activities namely; promotion and development of housing finance companies; regulation and supervision of housing finance companies and providing both direct finance and indirect finance to housing sector.

64. What do you mean by NABARD? – National Bank for agriculture and rural development was set up in 1982 as an apex development bank in the field of agricultural finance and rural development. NABARD is set up by the Government for the purpose of facilitating credit flow for promotion and development agriculture and integrated rural development. It covers supporting all other allied economic activities in rural areas, promoting sustainable rural development and ushering in prosperity in the rural areas

65. What do you mean by EXIM Bank? – Export and Import Bank of India was set up during the year, 1982 for the purpose of financing, promoting and facilitating foreign trade in the country. It is wholly owned by the Government of India. The bank apart from enhancing exports from the country, integrates the country’s foreign trade and investment with the overall economic growth.

66. What do you mean by SIDBI? – SIDBI was established for the purpose of assisting and promoting small scale industry. It was established on 2.4.1990. It is the principal financial institution established for the promotion, financing and development of industry in the small scale sector and to coordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector.

67. What do you mean by NBFCs? – Non Banking Finance Companies provide finance for small ventures but at the same time they are more customer oriented and operate at low volumes compared to the banks. They also collect deposits from customers and offer slightly higher interest rates on deposits compared to the banks.

68. What do you mean NEFT and RTGS ? – The two options namely – national electronic funds transfer and RTGS – real time gross settlement offered by Reserve Bank of India allow electronic transfer of funds from the remitter who has an account in one bank to the beneficiary who has account in any other bank/branch. The transfer can be carried out using the internet banking facility. The minimum amount that can be transferred by RTGS is Rs. 2.00 lakh and there is no such limit for transfer through NEFT. It is settled in batches at times defined by the Reserve Bank of India. RTGS transactions are settled continuously as and when they are put through. The transfer of funds through NEFT and RTGS can also be carried out by submitting the remittance form at the remitter’s bank branch.

69. What do you mean IFSC code? – IFSC means Indian financial system code. It is a eleven digit code to identify the bank branch. IFSC code is used while transferring the funds using RTGS and NEFT payments.

70. What do you mean by financial inclusion? In spite of vast growth in the banking system, a large number of  poor people are found not served by any banking services. They are living outside the purview of any bank. Financial inclusion is delivery of financial services at an affordable cost to the vast population of disadvantaged/low income sections of the society

71. What do you mean by No frill accounts? No frill accounts are accounts with very low or nil minimum balance as well as charges to be opened by the banks as targeted by Reserve Bank of India. KYC norms are relaxed for opening no frill accounts so that people living in rural and semi urban areas can open the accounts conveniently. Overdrafts up to Rs. 25000.00 are allowed in no frill accounts

72. What do you mean by narrow banking? – It is the system of banking under which the bank accepts deposits from the public and places the funds accepted in 100 percent risk free assets with maturity matching for its liabilities. The bank takes no risk of lending at all.

73. Who are business facilitators and business correspondents? – RBI has permitted the banks to use the services of business facilitators and correspondents with effect from 2006. The services of non governmental officers, microfinance institutions and civil society organizations can be utilized by the banks. They help the banks in identifying the borrowers processing their applications etc. without involving in business transactions. No approval of RBI is necessary. Correspondents will do all the above and will also participate in business transactions in a small way.

74. What do you mean by non performing assets? – Non performing assets means bad loans. When the principal and interest in the account becomes overdue for more than 90 days, it is treated as non performing assets. Non performance assets are classified into sub standard assets, doubtful assets and loss assets. Banks are willing to keep the level of non performance accounts at the lowest.

75. What are the major risks faced by banks according to Basel II norms? – Banks are facing credit risk, market risk and operational risk. When the bank lends an advance, it faces credit risk and sometimes the banks may not be able to recover the loan amount from the borrowers. In the case of failure of any bank product, the banks face market risk and operational risk occurs on account of failure of systems available in the bank branches namely; staff unrest; striking employees; computer failure; automated teller machines out of order etc.

76. What do you mean by merchant banking? – Merchant banking stands for provision of various services to corporate clients by helping them to access capital market. Merchant banks help the corporate customers to approach the capital market with initial public offers for the purpose of collection of capital by way of shares.

77. What do you mean by demat accounts? Demat means dematerialization. During the early days, share certificates and debenture certificates were issued in physical form. At present, they are issued in electronic form. It is the process by which paper securities are converted into electronic form so that they can be stored, sold and transferred easily.

78. What is a depository? – A depository holds the securities of the investors in electronic form. In our country there are two depositories namely; NSDL – National Securities Depositories Limited promoted by National Stock Exchange and CDSL – Central Depository Services Limited promoted by Bombay Stock Exchange.

79. What do you know by consortium financing? When a corporate is in need of huge finance – say Rs. 200 crores and above, banks join together and extend the loan facilities by sharing the loan amount between themselves. This reduces the risk for each bank. The banks jointly process the application of the borrower and sanction the advance and this is called as consortium lending.

80. What do you mean by repo rate? – It is the rate at which RBI lends short term funds to the commercial banks against securities. In order to temporarily expand the money supply, the central bank decreases repo rates enabling the banks to swap the government securities for cash. Repo is the abbreviation of Repurchase and to contract the money supply RBI increases the repo rates.

81. What do you mean reverse repo ? – The reverse repo rate is the interest rate that banks receive if they deposit money with the central bank. This reverse repo rate is always lower than the repo rate. Increases or decreases in the repo and reverse repo rate have an effect on the interest rate on banking products such as loans, mortgages and savings.

82. What do you mean by CRR? – CRR means Cash Reserve Ratio and as per the stipulations by Reserve Bank of India, all banks are in a position to maintain a certain percentage of their deposits (technically called as net demand and time liabilities) in their account with the RBI. CRR ranges from 5 percent to 15 percent. By increasing CRR by merely 0.25 percent, an amount of Rs. 15000 crores of liquid funds can be transferred from the commercial banks to the coffers of RBI. When CRR is reduced, the liquid funds are transferred from RBI to commercial banks.

83. What do you mean by SLR? – Statutory Liquidity Ratio refers to the stipulation by RBI that approximately 25 percent of the banks deposits is to be kept in the form of government securities, gold and cash. Primarily SLR refers to the amount invested by the banks in Government of India securities. RBI has the right to change the statutory liquidity ratio from time to time. On reduction of SLR, the availability of funds for the banks moves up and banks tend to lend more loans to the common public. In the case of increase in SLR, banks reduce bank lending.

84. What do you mean by PLR? – Prime lending rate is the rate at which commercial banks are willing to lend to their triple A rated No 1 borrowers. The lending rates by the bank for other borrowers whose credit worthiness is low will be more than prime lending rate. RBI has deregulated the lending rates that are to be charged by the banks for advance above Rs. 2 lakhs.

85. What do you mean by BPLR? – It is the rate at which commercial banks must charge to all their advances less than Rs. 2 lakhs.

86. Who is a non resident Indian? – Non resident Indian is the person who is the Indian citizen residing abroad for more than 182 days and has gone for abroad for the purposes namely; business, studies and employment.

87. What are the different types of accounts that can be opened by Non Resident Indians? – Non resident ordinary account, Non resident External account, FCNR account and RFC account.

88. What are the different currencies in which FCNR accounts can be opened? – FCNR accounts can be opened in the following currencies namely; US dollar, pound sterling, Euro, Australian dollar, Japanese Yen and Canadian dollar. FCNR accounts can be opened for a minimum period of one year and maximum period of three years

89. What are the traditional functions of RBI? – The traditional functions of RBI are – issue of currency, forex management, export assistance, clearing house functions, change of currency, transfer of currency, publication of statistics and other information and training in banking.

90. What are the developmental functions of RBI? – The developmental functions of RBI are – agriculture development, promotion of industrial finance, promotion of export through refinance, development of bill market, development and regulation of banking system.

91. What are the regulatory functions of RBI? – The regulatory functions of RBI are – qualitative credit control, bank rate, differential rate of interest, open market operations, Maintenance of CRR and SLR, direct action, credit authorization scheme and moral persuasion

92. What are the different types of financial institutions in our country? – The various financial institutions in our country are – RBI – Reserve Bank of India; SEBI – Securities and Exchange Board of India and IRDA – Insurance Regulatory and Development Authority of India. RBI monitors the various banks in the country; SEBI monitors and regulates capital markets and IRDA monitors the functions of insurance companies.

93. What are the different types of banks in our country? – In our country the following banks are available – savings banks; commercial banks; industrial banks; development banks; land development banks; indigenous banks; central bank; cooperative banks; exchange banks and consumer banks

94. What are the different types of secondary functions of any bank? – They are agency or representative functions; general utility services and social development functions.

95. What do you mean by agency or representative functions of any bank? – They are collection and payment of various items; purchase and sale of securities; trustee and executor; remitting money; purchase and sale of financial exchange; letter of references and other agency functions.

96. What are the general utility services offered by the banks? – They are locker facilities; business information; help in transportation of goods; acting as a referee; issuing of letters of credit; acting as underwriters; issue of traveler cheques; issue of gift cheques and dealing in merchant banking activities

97. What are the social development functions of a bank ? – They are capital formation; inducement to innovations; impact on the rate of interest; role on the development of rural sector; helping in pushing up the demand

98. Can you name some items which are covered under negotiable instruments act? – They are promissory notes, bills of exchanges; cheques, exchequer bills; circular notes; dividend warrants; share warrants; bearer debentures; bank notes and bank drafts

99. What do you mean by priority sector advance? – In order to boost development of agriculture and industries, Government of India has stipulated certain norms under which banks are in a position to allocate 40 percent of their advances exclusively to certain categories of borrowers called as priority sector advances. The following are classified into priority sector advances namely – retail traders, small business, professional and self employed; agriculture; small scale industries, self help groups, differential rate of interest and SC/ST beneficiaries

100.       What do you mean by weaker sections? – The following categories are termed as weaker sections namely – small business enterprises; marginal farmers; artisans/village and cottage industries for whom loans are granted upto Rs. 50000.00; SGSY beneficiaries; SC/ST beneficiaries; DIR beneficiaries; SJSRY beneficiaries; SLRS; self help groups and people belonging to minority community.

101.     What do you mean by a stale cheque? -  The validity of the cheque is for three months. When the date mentioned in the cheque is more than three months’ old, it is called as a stale cheque. Stale cheques cannot be debited to the account and the cheque should be returned to the tenderer.

102. What do you mean by post dated cheque? – When the date mentioned in the cheque is subsequent to the date on which the cheque has been presented it is considered to be the post dated cheque. Post dated cheques cannot be debited to the account and like any stale cheque, the cheque should be returned to the tenderer.

103. What do you know by housing loan? – When the customer avails any loan from the bank for purchase of any house it is called as housing loan. Housing loans are granted for the purpose of buying plots and construction of a house thereupon. In case the party is already having a plot, the loan can be granted to him for construction of the house on the said plot. The loan is recovered from the party through equated monthly instalments which consist of principal and interest.

104. What is the difference between current account and savings account? – Current accounts are opened for business purposes and savings accounts are opened for savings purposes. An individual can open savings account for the purpose of saving his money with the bank. He can open current account for doing his business transactions. Interest is payable in the case of savings accounts and in the case of current accounts, interest is not paid.

105. Whether any business concern can open savings bank account? Business organizations are not permitted to open savings bank accounts. Proprietorship concerns, partnership concerns, private limited companies and public limited companies are not allowed to open savings bank accounts.

106. Whether a director in a company can open savings bank account? The director can open savings bank account for the purpose of saving his personal money whereas he can open current account for his company as a director.

107. What is meant by public sector bank?- When the government holding in any bank is more than 51 percent, it is called as public sector bank. State Bank of India, Bank of India, Canara bank and all other nationalized banks are called as public sector banks.

108. When the banks were nationalized in our country and for what purpose? Banks were nationalized so that they can serve better for the society. During the first stage, fourteen banks were nationalized on 19.07.1969 and during the second stage six banks were nationalized. At present there are 20 nationalised banks in the country apart from State Bank and its subsidiaries.

109. Which is the largest bank in our bank ? – The largest bank in the country is State Bank of India. When it comes to private sector banks, ICICI bank is the largest bank. The size of the bank is decided by the total business and total business consists of total deposits and total advances as on 31^st March each year.

110. What do you know by ASBA? – ASBA means applications supported by blocked amount. When an individual is willing to invest in shares of prominent companies, instead of sending demand drafts he avails the cheque issued in ASBA account wherein the cheque amount is blocked till such time the cheque is cleared for debiting in the account. When shares are allotted, the cheque is debited in the account and when shares are not allotted, the cheque is returned. For the intervening period, the customer is able to enjoy the interest benefits.

111. What do you mean by bank deposits? – A bank deposit is the money we deposit at a banking institution for safekeeping. The right to withdrawal depends on the terms and conditions of the bank where the money is deposited. A bank deposit entails a liability which the bank owes to the depositor.

112. What do you mean by bank rate? – It is the rate at which Reserve Bank of India (central bank of the country) lends money to other banks or financial institutions. The bank rate set by the central bank acts as a long term cue for other banks to set their own lending and deposit rates. The present rate is 9 percent.

113. What do you mean by base rate? – This rate is a replacement to the earlier system of Benchmark Prime Lending rate (BPLR) used by the banks. RBI has made the base rate effective from 1.7.2010 and unlike in the earlier system of BPLR, banks cannot lend below the base rate which they declare.

114. What do you mean by capital adequacy ratio? – This is the ratio of a bank’s capital to the weighted risks arising out of its assets (loans, credits etc). The CAR of a bank has to be above a minimum level so that there is little risk of its failure. RBI directs the CAR for different categories of banks.

115. What do you mean by cash reserve ratio? – It is the percentage of the depositor’s balances that a bank must hold in cash in its specified current account with the Reserve Bank of India and RBI decides on the rate. The present rate is 4.25%

116. What do you mean by economic growth? – A country is said to be experiencing economic growth if it displays an increased capacity to produce the goods. Economic growth is usually adjusted for factors like inflation, deflation and increase or decrease in population. Economic growth happens as of superior means of production which results from prudent economic policies.

117. What do you mean by retail banking? – The bank which concentrates more in retail banking services namely; lending for housing loans, personal loans, educational loans etc.

118. What do you mean by forward contract? – It is a contract between two parties to the sale and purchase of an asset at a specific price on a specific date in the future. These are not traded on organized exchanges and are not liquid as they are not easily transferred or cancelled.

119. What do you mean global depository receipt? – It is a negotiable certificate of ownership in the shares of a foreign company that trades in a foreign country’s stock exchange. It allows both foreign companies as well as foreign investors, trading flexibility.

120. What do you mean by gross domestic product? – It is the market value of all the finished goods and services produced within the borders of a country over a particular period. It includes private and public consumption, government outlays, investments and exports net of imports.

121. What do you mean by inflation? – It is termed as the continual rise in the general level of prices. It is commonly expressed as an annual percentage rate of change on an index number.

122. What do you mean by micro credit? – It is the provision of small loans to poor people (especially women), particularly in developing countries, to help them engage in self employment and escape from the clutches of poverty.

123. What do you mean by NABARD? – It is the facilitator of rural prosperity as an apex development bank, with a mandate to facilitate credit flow for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas.

124. What do you mean by overdraft? – It is a credit facility on a customer’s account at a bank (usually a current account) which allows her to overdraw upto a presanctioned limit across an agreed period and where, interest is payable only on the overdrawn amount. It is availed of in the case of fluctuating credit requirement.

125. What do you mean by recession? – It is a phase of dismal economic activity, usually accompanied by rising unemployment. It is usually defined by two successive quarters of negative GDP growth and is considered to have a cycle character. An imminent global recession is likely as signs of dismal economic performance are being witnessed.

126. What to you mean by Repo? – It is a contract by which a party sells a security to another party and agrees to buy it back on a specified date and price. In a repo, a bank in need of cash, can sell securities to Reserve Bank of India against cash, on the condition that the bank will repurchase the securities in a short period. The current repo rate is 8 percent.

127. What do you mean by reverse repo? – It is a repurchase agreement in reverse. In a reverse repo, banks with excess cash, can buy securities from Reserve Bank of India against cash, on condition that they resell the securities to RBI on a pre fixed day and price. The current reverse repo rate set by the RBI is 7 percent.

128. What do you mean by self help group? – It is a small group consisting of ten to 20 members who are coming together to improve their social and economic status and have agreed to save regularly and contribute to a common fund and lend to the needy members from such fund as well as from loans and grants received by the group.

129. What do you know by SIDBI? – It is the principal institution for promoting, financing and assisting the development of industries in the small scale sector. The key beneficiaries for financial assistance include small yet promising entrepreneurs and traders.

130. What do you mean by shares? – For the purpose of building fixed capital, joint stock companies are authorized to issue shares and according to companies act, two kinds of shares can be issued by the companies namely; ordinary shares and preference shares.

131. What do you mean by ordinary shares? - Ordinary shares mean any shares that are not preferred shares and do not have any predetermined dividend amounts. The dividend on ordinary shares is high when the company does well, poor or non existing when it goes badly.

132. What do you mean by preference shares? – Preference shares are those shares which are given preference as regards to payment of dividend and repayment of capital.

133. What do you mean by point of sale terminal? – To use smart cards/debit cards/credit cards for the purchase of an item or for payment of a service at a merchant’s store, the card has to be swiped in a terminal (known as point of sale or POS terminal) kept at the merchant’s store. As soon as the card is put on the terminal, the details of the card are transmitted through dial up or leased lines to a host computer. On verification of the genuiness of the card, the transaction is authorized and concluded and it is thus a means to check out whether the cardholder is authorized to make a transaction using the card.

134. What do you mean by scheduled bank? – According to RBI act, 1934, a scheduled bank is that bank which has been included in the second schedule of the Reserve Bank. To be eligible for this concession, a bank must satisfy the following three conditions: it must have paid up capital and reserves of an aggregate value of at least Rs. 5 lakhs; it must satisfy RBI norms so that its affairs are not conducted in a manner detrimental to the interests of depositors and it must be a corporation and nor a partnership or a single owner firm. RBI gives them credit and other facilities

135. What do you mean by non scheduled banks? – These are those banks of which the total capital is less than Rs. 5 lakhs and these are not included in the second schedule of the Reserve Bank and Reserve Bank has no specific control upon these banks. However, they have to send the details of their business to Reserve Bank every month.

136. How many public sector banks are there in our country? – There are 108 public sector banks in our country and out of these one is State Bank of India and its five subsidiary banks; 20 nationalised banks and 82 Regional Rural Banks.

137. How many private sector banks are there in our country? – There are 21 private sector banks in our country out of which 14 are old private sector banks and 7 are new private sector banks.

138. What do you mean by new generation banks? – During the reforms period, many new generation banks have successfully emerged on the financial horizon. Banks such as ICICI bank, HDFC bank, UTI bank have posed a big challenge to the public sector banks leading to a great degree of competition.

139. What do you mean by micro finance? – It is a financial service of small quantity provided by the entrepreneur from low income households. These financial services may include saving, credit, insurance, leasing, money transfer, equity transfer etc. i.e. any type of financial services provided to customers to meet their financial needs with the requirement that (i) transaction value is less; ii) customers belong to the poor strata of society.

140. What is the purpose of establishing Regional Rural Banks? – The main objective of Regional Rural Banks is to provide credit and other facilities particularly to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs and develop agriculture, trade, commerce, industry and other productive activities in the rural area. Regional Rural Banks came into existence in order to reduce regional imbalances and increase rural employment generation.

141. What is a bill of exchange? – It is an instrument in writing containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.

142. What do you know by an open cheque? – A cheque is called open when it is possible to get cash over the counter at the bank. The holder of an open cheque can do the following namely; receive its payment over the counter at the bank; deposit the cheque in his own account and pass it to some one else by signing on the back of the cheque.

143. What do you mean by endorsement ? – When the cheque is presented to the banker for encashment, the holder has to sign on the backside of the cheque. The signature on the backside of the cheque is called as endorsement and the person who is endorsing the cheque is called as endorser.

144. What do you mean by allonge? – Endorsements are made on the backside of the cheque and when there is no space left for noting further endorsements, the holder attaches a slip of paper to the cheque so that further endorsements can be made on the cheque. Such slip of paper attached to the cheque is called as allonge.

145. What do you know by National Housing Bank? – National Housing Bank is the apex institute of housing finance and it aims at efficient development of housing finance system. The main objectives of the bank is to develop and finance housing activity especially; promoting construction of new houses; advancing loans for extension and renovation of old houses; financing development of slum areas and refinance the loans given to the poor and weaker sections for constructing or buying their houses.

146. What do you mean by letter of credit? – It is a document issued by a bank (on behalf of the buyer or the importer) stating its commitment to pay a third party (seller or the exporter), a specific amount, for the purchase of goods by its customer, who is the buyer. The seller has to meet the conditions given in the document and submit the relevant documents, in order to receive the payment. Letters of credit are mainly used in international trade transactions of huge amounts, wherein the customer and the supplier live in different countries.

147. What do you mean by smart cards? – Unlike debit cards and credit cards (with magnetic stripes), smart cards possess a computer chip, which is used for data storage, processing and identification.

148. What do you mean by assets? – It is an accounting term for everything a company owns that has monetary value, i.e.; as shown in the balance sheet (liquid assets, receivables, property, plant and equipment, investments in associates etc). In the case of balance sheet of any bank, assets represent the loans granted to the borrowers and liabilities represent the deposits to be repaid to the depositors.

149. What do you mean by balance sheet? – It is a statement showing the business position of any firm as on a particular date. The business position is represented by assets and liabilities and in the case of balance sheet pertaining to any bank, assets represent the loan amount to be recovered from the borrowers and liabilities represent the deposits to be refunded to the depositors.

150. What do you mean by bank draft? – It is a cheque drawn by a bank on one of its branches or correspondents requesting the latter to pay the specified sum of money to the person named in the draft. Bank drafts provide a cheap and convenient method of remitting money from one place to another.

PRACTICAL QUESTIONS- PART: 002

You are an officer recently posted in the bank branch of State Bank of India and under the following situation how you will act?

151.     You are in charge of deposits counter and a customer approaches you on 12.01.2013 with cheque dated: 12.01.2012 for an amount of Rs. 1000/- payable to bearer – The cheque cannot be paid since it is dated: 12.01.2012. Normally the cheque is valid for three months only. I shall return the cheque to the customer informing him of the facts.

152.     The second  customer approaches you with a cheque dated: 10.01.2013 favouring Kannan or order: Since the cheque is found to be an order cheque, I have to exercise much care to identify the person. I shall request the customer to prove his identity and request him to produce  a driving licence, voter id card, AATHAAR card or identify card issued by his employer and when I am satisfied with the identity of the person, I shall permit him to withdraw the amount.

153.     Five minutes later, the third customer approaches you with a crossed cheque dated: 12.03.2013 for an amount of Rs. 5000.00 and demands payment: - On the one hand the cheque is dated 12.03.2013 and is found to be post dated and I cannot pay the cheque; On the other hand, the cheque is crossed and the customer can get payment of the cheque through his account only.

154.     The fourth customer approaches you with a cheque crossed to Indian Overseas Bank and the cheque is dated: 10.01.2013 for an amount of Rs. 5000.00 favouring the customer: - The cheque is crossed to Indian Overseas Bank and necessarily the customer can get the payment of the cheque through his account with Indian Overseas Bank only. The cheque cannot be paid through his account with SBI..

155.     The fifth customer approaches you with a cheque dated: 10.01.2013 for an amount of Rs. 5000.00. On going through the cheque you find that amount in the cheque has been written as “five thousand five hundred only”:  According to Negotiable Instruments Act, when the amount mentioned in words and figures differ, the amount mentioned in words has to be taken into account and I shall arrange to make payment for Rs. 5500.00.

156.     An old lady comes to you and requests you to help her in opening a savings bank account – For opening savings account, she has to produce two passport size photographs; provide identify proof and address proof and she can produce her voter ID card for this purpose; she has to remit the minimum amount required for opening the account. I shall provide her the bank account opening form and once filled in I shall check the details and direct her to meet the Manager in charge for getting his authorization for opening the account.

157.     A customer approaches you and requests you to help him opening a savings bank account for his partnership firm – Savings bank account cannot be opened by a partnership firm. However, as an Individual he can open savings bank account for himself and not in the capacity of a partner in his partnership firm.

158.     The partner of a partnership firm approaches you for opening one current account for the partnership firm. – I shall request the customer to produce the details about the various partners. I shall demand from him, the copy of partnership deed in respect of the firm and from the partnership deed, I shall find out the operation conditions. I shall provide him the necessary application form and advise him that the authorized partners should come personally to the bank branch for opening the account along with passport size photographs, address proof and identify proof, a copy of partnership deed and the minimum balance required for opening the account.

159.     A student aged 12 years old approaches you for opening savings bank account in his name and how will you guide him? Savings bank accounts can be opened in the name of minors under two conditions. The minor can himself open the account provided he is a student and produces a certificate from the Headmaster or Principal of school stating that he is a bonafide student studying in the school and subject to other formalities an account can be opened in his name in individual capacity. Otherwise either his father or mother should open an account in his name and the account will be operated by his natural guardian on behalf of the minor, till such time the minor attains majority.

160.     A minor boy approaches you with a cheque for an amount of Rs 5000 payable to bearer. The cheque can be paid to the minor provided the cheque is in order in all respects. There is no harm in paying the amount of the cheque to the minor.

BANKS – PUNCHLINES- PART: 003

01.       Allahabad Bank – A tradition of trust

02.       Andhra Bank – For all your needs

03.       Bank of Baroda – India’s International Bank

04.       Bank of Maharashtra – One family one bank

05.       Bank of India – Relationship beyond banking

06.       Canara Bank – Together we can

07.       Central Bank Of India – Build a better life around us

08.       Corporation Bank – Prosperity for all

09.       Dena Bank – Trusted Family Bank

10.       Indian Bank – Your tech friendly Bank

11.       Indian Overseas Bank – Good people to grow with

12.       Oriental Bank of Commerce – Where every individual is committed

13.       Punjab National Bank – The name you can bank upon

14.       Punjab and Sind Bank – To strive to achieve excellence in customer service

15.       Syndicate Bank – Faithful and friendly

16.       United Commercial Bank – Honours your trust

17.       Union Bank of India – Good people to bank with

18.       United Bank of India – The bank that begins with “U”

19.       Vijaya Bank – A friend you can bank on

20.       State Bank of India – With you all the way

21.       State Bank of Hyderabad – Modern Innovative dependable

22.       State Bank of Mysore – Working for a better tomorrow

23.       State Bank of Patiala – Blending modernity with tradition

24.       State Bank of Travancore – Since 1945 – a long tradition of trust

25.       ICICI Bank – Hum Hai Na

26.       IDBI Bank – Banking for all

27.       HSBC bank – World’s local bank

28.       HDFC Bank – We understand your world

29.       Bank of Rajasthan – Together we prosper

30.       Federal Bank – Your perfect Banking partner

31.       Yes Bank – Experience our expertise

32.       Jammu and Kashmir Bank – Serving to empower

33.       Lakshmi Vilas Bank Limited – The changing face of prosperity

34.       Karur Vysya Bank – Smart way to Bank

35.       Deutshe Bank – A passion to perform

36.       South Indian Bank Limited – Experience Next Generation Banking

QUESTION BANK: PART: 004

01. What do you mean by Network? - It is simply a group of two or more personal computers linked together for communicating the data or any other mode of communication.

02. What do you mean by networking?- It is the practice of linking two or more computing devices together for the purpose of sharing data. They are built with a mix of computer hardware and computer software.

03. What do you mean by winding up ?-It means the life of the company is put to an end. It is a mode by which the dissolution of the company is brought about and its assets realized and applied in payment of its debts and after satisfaction of the debts, the balance, if any, is paid back to the members in proportion to the contribution made by them to the capital of the company.

04. What do you mean by secured creditor?-It  means the creditor in whose favour the company has created charge on the properties/assets of the company for due repayment of the loans/advances availed from him.

05. What do you mean by contributory?- Every person, such as shareholders, directors, debtors etc. of the company, who are liable to contribute to the assets of the company at the time of its winding up is called contributory.

06. What do you mean by receiver? -Receivers appointed by the court for keeping the property involved in the suit in safe custody or for management of the same is called court receiver. Usually advocates are being appointed as receivers, however, in some cases depending on the gravity of the issue may appoint the High Court judges, Civil Court Judges, District Collector etc also as Receivers to take over the control of and manage the property in issue.

07. What do you mean by credit scoring?-It is a technique which is being increasingly utilized by banks for assessing informationally opaque borrowers. In developing economies, banks have started using the credit scoring technique in a big way, especially for retail lending including housing loans and credit cards. It is essentially a statistical number that indicates the level of risk associated with the borrowers. Higher/lower credit score reflects lower/higher level of risks of borrowers.

08. What do you mean by outsourcing?-It can be defined as use of a third party to perform activities on a continuing basis that would normally be undertaken by the bank itself. Third party or service provider refers to the entity that is undertaking the outsourced activity on behalf of the bank.

09. What do you mean by six sigma?- It is a rigorous methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating "defects" thereby eliminating the cost of defects. Six Sigma practitioners focus on systematically eliminating the defects so that they can get as close to "zero defect" as possible.

10. What do you mean by bank rate? - It is the rate at which RBI allows finance to commercial banks. Bank Rate is a tool used by RBI for short term purposes. Any revision in Bank Rate is a signal to banks to revise deposit rates as well as Prime Lending rate.

11. What do you mean by tier two capital?-It is also known as supplementary capital and it comprises of property revaluation reserve, undisclosed reserves, hybrid capital, subordinated term debt and general provisions.

12. What do you mean by intermediary agencies?- The category comprises of state sponsored organisations' lending to weaker sections. RBI also considers the distributors of agricultural inputs and implements and agencies involved in assisting the decentralized sector as intermediary agencies.

13. What do you mean by statutory liquidity ratio?- Under section 24(b) of the Banking Regulation Act, 1949, every bank is required to maintain at the close of the business every day, a minimum proportion of their net demand and time liabilities as liquid assets in the form of cash, gold and unencumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as SLR. Present SLR is 25% and RBI is empowered to increase SLR upto 40%.

14. What do you mean by immunization?-The construction of an asset and a liability that are subject to offsetting changes in value.

15.What do you mean by indenture?-It is a formal agreement establishing the terms of a bond issue

16. What do you mean by indexed fund?-Bonds whose payments are linked to an index such as a consumer price index.

17. What do you mean by index fund?-Investment fund designed to match the returns on a stock market index.

18. What do you mean by bounce protection?-California has introduced "bounce protection" a kind of short term, high-interest credit, for its local banks. Banks can attach it to current accounts without authorization. The customer may be charged a fee of as much as $5 each day, if the account is overdrawn or may have to pay interest on the amount of insufficient funds

19. What do you mean by real effective exchange rate?-It is an indicator to grasp a country's international competitiveness in terms of its foreign exchange rate, as this cannot be known by examining individual exchange rates between the domestic and other currencies. It is the product of nominal bilateral exchange rate between countries and their relative price differentials. It is a trade-weighted index which gives an indication of a country's export competitiveness vis-à-vis the rest of the world taking into account the effect of its exchange rate as well as price differentials vis-à-vis its trading partners.

20. What do you mean by internal rate of return?- It is the discount rate at which net present value of cash inflows and cash outflows is zero. In case of debt instruments, it is the rate at which instrument's future cash flows, discounted back to today, equals its price. In a project evaluation IRR should be equal to the cost of capital or threshold rate of return.

21. What do you mean by asset liability management system?-it is a system to manage the assets and liabilities of a bank. It aims at achieving maximum returns while maintaining adequate liquidity at all times. ALM involves assessment of various types of risks and altering the asset liability mix-portfolio in a dynamic way in order to manage risks.

22. What do you mean by samurai bonds?-They are offered in the Japanese domestic market by a non-Japanese entity. Lower incidence of withholding tax is a major attraction for raising funds in the Japanese markets. Although there is only a small quantum of saving between the interest charges of a straight Libor-linked borrowing and Yen-borrowing linked to a Dollar swap, the withholding tax factor is what makes a significant difference.

23. What do you mean by liquidity policy?- It is a monetary tool used by RBI to modulate the very short term liquidity(daily) in the system. It does so through repo(repurchase agreement) and reverse repo transactions. RBI uses repo operations in the LAF window to inject liquidity into the system by buying government securities from banks. RBI uses the reverse repo to suck out liquidity from the system by selling government securities to banks. LAF has emerged as the primary tool for monetary control, interest rate signaling and sterilization operations, among others.

24. What do you mean by demutualization?- It is a process that changes a mutual or a cooperative association into a public company by converting the interests of the members into shareholdings. These holdings can then be traded like the shares of a company. The objective of such an exercise is to change the structure of exchanges that were originally formed as trusts. Demutualisation allows such associations to conduct commercial business, to make profits like any other corporate entity.

25. What do you mean by merchant banking? – A merchant banker is a financial intermediary who helps to transfer capital from those who possess it to those who need it. Merchant banking includes a wide range of activities such as management of customers securities, portfolio management, project counseling and appraisal, underwriting of shares and debentures, loan syndication, acting as banker for the refund orders, handling interest and dividend warrants etc. Thus a merchant banker renders a host of services to corporate and thus promotes industrial development in the country.

26. What do you mean by leasing? – A lease is an agreement under which a company or a firm, acquires a right to make use of a capital asset like machinery, on payment of a prescribed fee called as “rental charges”. The lessee cannot acquire any ownership to the asset but he can use it and have full control over it. He is expected to pay for all maintenance charges and repairing and operating costs. Commercial banks have also been permitted to carry on this business by forming subsidiary companies.

27. What do you mean by mutual fund? A mutual fund refers to a fund raised by a financial service company by pooling the savings of the public. It is invested in a diversified portfolio with a view to spreading and minimizing risk. The fund provides investment avenue for small investors who cannot participate in the equities of big companies. It ensures low risks, steady returns, high liquidity and better capital appreciation in the long run.

28. What do you mean by venture capital? – Venture capital is another method of financing in the form of equity participation. A venture capitalist finances a project based on the potentialities of a new innovative project. It is in contrast the conventional “security based financing”. Much thrust is given to new ideas or technological innovations. Finance is being provided not for start up capital but also for development capital by the financial intermediary.

29. What do you mean by forfeiting? – Forfeiting is a technique by which a forfeiter (financing agency)discounts an export bill and pay ready cash to the exporter who can concentrate on the export front without bothering about collection of export bills. The forfeiter does so without any recourse to the exporter and the exporter is protected against the risk of non payment of debts by the importers.

30. What do you mean by factoring? – Factoring refers to the process of managing the sales ledger of a client by a financial service company. In other words, it is an arrangement under which a financial intermediary assumes the credit risk in the collection of book debts for its clients. The entire responsibility of collecting the book debts passes on to the factor. His services can be compared to a del credere agent who undertakes to collect debts. But a factor provides a credit information, collects debts, monitors the sales ledger and provides finance against debts. Thus, he provides a number of services apart from financing.

Wishing you all the best