Bouncing of a cheque

When an account has insufficient funds the cheque is is not payable and is returned by the bank with a reason
“Exceeds arrangement” or “funds insufficient”.

Bank Rate
It is the rate of interest charged by a central bank to commercial banks on the advances and the loans it extends.

Cheque
It is written by an individual to transfer amount between two accounts of the same bank or a different bank and
the money is withdrawn form the account.

Core Banking Solutions (CBS)

In this all the branches of the bank are connected together and the customer can access his/her funds or
transactions from any other branch.

CRR (Cash Reverse Ratio)

the amount of funds that a bank keep with the RBI. If the percentage of CRR increases then the amount with the
bank comes down.

Debit Card
It is a card issued by the bank so the customers can withdraw their money from their account electronically.

Demat Account
The way in which a bank keeps money in a deposit account in the same way the Depository company converts
share certificates into electronic form and keep them in a Demat account.

E-Banking
It is a type of banking in which we can conduct financial transactions electronically. RTGS, Credit cards, Debit
cards etc come under this category.

EFT – (Electronic Fund Transfer)

In this we use Automatic teller machine, wire transfer and computers to move funds between different accounts
in different or same bank.

Fiscal Deficit
It is the amount of Funds borrowed by the government to meet the expenditures.
Initial Public Offering (IPO)
It is the time when a company makes the first offering of the shares to the pubic.

Leverage Ratio
It is a financial ratio which gives us an idea or a measure of a company’s ability to meet its financial losses.

Liquidity
It is the ability of converting an investment quickly into cash with no loss in value.

Market Capitalization
The product of the share price and number of the company’s outstanding ordinary shares.

Mortgage
It is a kind of security which one offers for taking an advance or loan from someone.

Mutual Fund
These are investment schemes. It pools money from various investors in order to purchase securities.

Pass Book
It is a book where all the bank transactions are recorded.They are mainly issued to Current or Savings Bank
account holders.

Repo Rate
Commercial banks borrow funds by the RBI if there is any shortage in the form of rupees. If this rate increases
it becomes expensive to borrow money from RBI and vice versa.

Savings Bank Account

It is account of nominal interest which can only be used for personal purpose and which has some restrictions
on withdrawal.

SLR (Statutory Liquidity Ratio)

It is amount that a commercial bank should have before giving credits to its customers which should be either in
the form of gold,money or bonds.

Teller
He/she is a staff member of the bank who cashes cheques, accepts deposits and perform different banking
services for the general mass.

Universal Banking
When financial institutions and banks undertake activities related to banking like investment, issue of debit and
credit card etc then it is known as universal banking.

Virtual Banking
Internet banking is sometimes known as virtual banking. It is called so because it has no bricks and boundaries.
It is controlled by the world wide web.

Wholesale Banking
It is similar to retail banking with a slight difference that it mainly focuses on the financial needs of the
institutional clients and the industry.

Zero Coupon Bond

It is a bond that is sold at good discount as it has no coupon.

3) What is commercial bank?

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.

4) What are the types of Commercial Banks?

a) Retail or consumer banking

It is a small to mid-sized branch that directly deals with consumer’s transaction rather than corporate or other
banks

b) Corporate or business banking

Corporate banking deals with cash management, underwriting, financing and issuing of stocks and bonds

c) Securities and Investment banking

Investment banking manages portfolios of financial assets, commodity and currency, fixed income, corporate
finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.

d) Non-traditional options
There are many non-bank entities that offer financial services like that of the bank. The entities include credit
card companies, credit card report agencies and credit card issuers

5) What is consumer bank?

Consumer bank is a new addition in the banking sector, such bank exist only in
countries like U.S.A and Germany. This bank provides loans to their customer to buy
T.V, Car, furniture etc. and give the option of easy payment through instalment.

6) What are the types of accounts in banks?

a) Checking Account: You can access the account as the saving account but, unlike
saving account, you cannot earn interest on this account. The benefit of this account
is that there is no limit for withdrawal.

b) Saving Account: You can save your money in such account and also earn interest
on it. The number of withdrawal is limited and need to maintain the minimum
amount of balance in the account to remain active.

c) Money Market Account: This account gives benefits of both saving and checking
accounts. You can withdraw the amount and yet you can earn higher interest on it.
This account can be opened with a minimum balance.

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.

7) What are the different ways you can operate your accounts?

You can operate your bank accounts in different ways like

a) Internet banking

b) Telephone or Mobile banking

c) Branch or Over the counter service

d) ATM ( Automated Teller Machine)

8) What are the things that you have to keep in concern before opening the bank
accounts?
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.

9) What is ‘Crossed Cheque’ ?

A crossed cheque indicates the amount should be deposited into the payees account
and cannot be cashed by the bank over the counter. Here in the image, number#2,
you can see two cross-lines on the left side corner of the cheque that indicates
crossed cheque.

10) What is overdraft protection?

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.

11) Do bank charge for ‘overdraft protection’ service?

Yes, bank will charge on ‘overdraft protection’ services but the charges will be
applicable only when you start using the service.

12) What is (APR) Annual Percentage Rate?

APR stands for Annual Percentage Rate, and it is a charge or interest that the bank
imposes on their customers for using their services like loans, credit cards,
mortgage loan etc. The interest rate or fees imposed is calculated annually.

13) What is ‘prime rate’?

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%.

14) What is ‘Fixed’ APR and ‘Variable’ APR?

‘APR’ (Annual Percentage Rate) can be ‘Fixed’ or ‘Variable’ type. In ‘Fixed APR’, the
interest rate remains same throughout the term of the loan or mortgage, while in
‘Variable APR’ the interest rate will change without notice, based on the other
factors like ‘prime rate’.

15) What are the different types of banking software applications are available in
the Industry?

There are many types of banking software applications and few are listed below

a) Internet banking system: Internet banking allows the customers and financial
institution to conduct final transaction using banks or financial institute website.

b) ATM banking (Automated Teller Machine): It is an electronic banking outlet,

which allows customers to complete basic transaction.

c) Core banking system: Core banking is a service provided by a networked bank

branches. With this, customer can withdraw money from any branch.

d) Loan management system: The database collects all the information and keeps
the track about the customers who borrows the money.

e) Credit management system: Credit management system is a system for handling

credit accounts, assessing risks and determining how much credit to offer to the
customer.

f) Investment management system: It is a process of managing money, including

investments, banking, budgeting and taxes.

g) Stock market management system: The stock market management is a system

that manages financial portfolio like securities and bonds.

h) Financial management system: Financial management system is used to govern

and keep a record of its income, expense and assets and to keep the accountability
of its profit.

16) What is the ‘cost of debt’?

When any company borrows funds, from a financial institution (bank) or other
resources the interest paid on that amount is known as ‘cost of debt’.

17) What is ‘balloon payment’?

The ‘balloon payment’ is the final lump sum payment that is due. When the entire
loan payment is not amortized over the life of the loan, the remaining balance is due
as the final repayment to the lender. Balloon payment can occur within an
adjustable rate or fixed rate mortgage.

18) What is ‘Amortization’?

The repayment of the loan by instalment to cover principal amount with interest is
known as ‘Amortization’.

19) What is negative Amortization?

When repayment of the loan is less than the loans accumulated interest, then
negative Amortization occurs. It will increase the loan amount instead of decreasing
it. It is also known as ‘deferred interest’.

20) What is the difference between ‘Cheque’ and ‘Demand draft’?

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.

21) What is debt-to-Income ratio?

The debt-to-income ratio is calculated by dividing a loan applicant’s total debt

payment by his gross income.

22) What is adjustment credit?

Adjustment credit is a short-term loan made by the Federal Reserve Bank (U.S) to
the commercial bank to maintain reserve requirements and support short term
lending, when they are short of cash.

23) What do you mean by ‘foreign draft’?

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.

24) What is ‘Loan grading’?

The classification of loan based on various risks and parameters like repayment
risk, borrower’s credit history etc. is known as ‘loan grading’. This system places
loan on one to six categories, based on the stability and risk associated with the
loan.

25) What is ‘Credit-Netting’?

A system to reduce the number of credit checks on financial transaction is known as

credit-netting. Such agreement occurs normally between large banks and other
financial institutions. It places all the future and current transaction into one
agreement, removing the need for credit cheques on each transaction.

26) What is ‘Credit Check’?

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.

27) What is inter-bank deposit?

Any deposit that is held by one bank for another bank is known as inter-bank
deposit. The bank for which the deposit is being held is referred as the
correspondent bank.

28) What is ILOC (Irrevocable Letter Of Credit)?

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.

29) What is the difference between bank guarantee and letter of credit?
There is not much difference between bank guarantee and letter of credit as they
both take the liability of payment. A bank guarantee contains more risk for a bank
than a letter of credit as it is protecting both parties the purchaser and seller.

30) What is cashier’s cheque?

A cashier cheque issued by the bank on behalf of the customer and takes the
guarantee for the payment. The payment is done from the bank’s own funds and
signed by the cashier. The cashier cheque is issued when rapid settlement is
necessary.

31) What do you mean by co-maker?

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 co-signer.

32) What is home equity loan?

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.

33) What is Line of credit?

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).

34) How bank earns profit?

The bank earns profit in various ways

a) Banking value chain

b) Accepting deposit

c) Providing funds to borrowers on interest

d) Interest spread

e) Additional charges on services like checking account maintenance, online bill

payment, ATM transaction

35) What are payroll cards?

Payroll cards are types of smart cards issued by banks to facilitate salary payments
between employer and employees. Through payroll card, employer can load salary
payments onto an employee’s smart card, and employee can withdraw the salary
even though he/she doesn’t have an account in the bank.

36) What is the card based payments?

There are two types of card payments

a) Credit Card

b) Debit Card

37) What ACH stands for?

ACH stands for Automated Clearing House, which is an electronic transfer of funds
between banks or financial institutions.

38) What is ‘Availability Float’?

Availability Float is a time difference between deposits made, and the funds are
actually available in the account. It is time to process a physical cheque into your
account.

For example, you have $20,000 already in your account and a cheque of another
$10,000 dollar is deposited in your account but your account will show balance of
$20,000 instead of $30,000 till your $10,000 dollar cheque is cleared this
processing time is known as availability float.

39) What do you mean by term ‘Loan Maturity’ and ‘Yield’?

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.
40) What is Cost Of Funds Index (COFI)?

COFI is an index that is used to determine interest rates or changes in the interest
rates for certain types of Loans.

41) What is Convertibility Clause?

For certain loan, there is a provision for the borrower to change the interest rate
from fixed to variable and vice versa is referred as Convertibility Clause.

42) What is Charge-off?

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.

43) What ‘LIBOR’ stands for?

‘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.

44) What do you mean by term ‘Usury’?

When a loan is charged with high interest rate illegally then it is referred as ‘Usury’.
Usury rates are generally set by State Law.

45) What is Payday loan?

A pay-day loan is generally, a small amount and a short-term loan available at high
interest rate. A borrower normally writes post-dated cheques to the lender in
respect to the amount they wish to borrow.

46) What do you mean by ‘cheque endorsing’?

‘Endorsing cheque’ ensures that the cheque get deposited into your account only. It
minimizes the risk of theft. Normally, in endorsing cheque, the cashier will ask you
to sign at the back of the cheque. The signature should match the payee. The image
over here shows the endorsed cheque.

47) What are the different types of Loans offered by banks?

The different types of loans offered by banks are:

a) Unsecured Personal Loan

b) Secured Personal Loan

c) Auto Loans

d) Mortgage Loans

e) Small business Loans

48) What are the different types of ‘Fixed Deposits’?

There are two different types of ‘Fixed Deposits’

Special Term Deposits: In this type of ‘Fixed Deposits’, the earned interest on the
deposit is added to the principal amount and compounded quarterly. This amount
is accumulated and repaid with the principal amount on maturity of the deposit.

Ordinary Term Deposits: In this type of ‘Fixed Deposits’, the earned credit is
credited to the investor’s account, once in a quarter. In some cases, interest may be
credited on a monthly basis.

The earned interest on fixed deposits is non-taxable. You can also take a loan
against your fixed deposit.

49) What are the different types of Loans offered by Commercial Banks?

Start-Up Loans

This type of Loan is offered to borrower to start their business and can be used to
build a storefront, to acquire inventory or pay franchise fees to get a business
rolling.

Line of Credit

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.

Small Business Administration Loans

It is a Federal Agency (U.S) that gives funding to small businesses and

entrepreneurs. SBA (Small Business Administration) loans are made through banks,
credit unions and other lenders who partners with SBA.
50) What is ‘Bill Discount’?

‘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.

51) What is ‘Bill Purchase’?

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.

52) What is ‘Cheque Discount’?

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.

Q: Tell /describe about yourself (you will be asked this 90%)

A: Don't recite your resume.Tell about your education, experience, projects worked,
passion etc.,

Make sure you complete this within 2-3mins so the interviewer doesn't get bored.If
you need detailed tips, proceed to read ‘how to answer Tell me about yourself

Q: Why should we hire you into our organization?

A : This would be perfect time to tell about your strengths,achievements & assets.
Compare your profile with the job role & justify that you will be a best fit for the
job.
Answers like ‘This is a best company’ , ‘I want a job in this field’ wont impress the
interviewer.

If you are an engineering graduate or PG degree holder (MBA/ MCA), prepare a

convincing answer since this will be a sure question.

Banking Ombudsman: Banking Ombudsman is a quasi-judicial authority, which functions

under India’s Banking Ombudsman Scheme 2006. It was created by Government of India with a
purpose to deal with the complaints of customers of the banks related to various services
rendered by the banks.

Deflation: It is a decrease in the general price level of goods and services.

Inflation: It can be defined as a sustained increase in the general level of prices for goods and
services.

Liquidity: Liquidity describes the degree to which an asset or security can be quickly bought or
sold in the market without affecting the asset’s price.

Merchant Banking: It is a combination of Banking and consultancy services.

Monetary Policies: It refers to the use of instruments by Reserve Bank of India (RBI) to
regulate the availability, cost and use of money and credits.

Plastic Money: It is a term used in reference to the hard plastic cards we use every day in place
of actual bank notes.

Cash Reserve Ratio (CRR): Cash reserve Ratio (CRR) is the amount of funds that the banks
have to keep with the RBI.

Refinance Facilities: RBI offers refinance facility to help out the exporters by replacing an
existing debt obligation with another.

Statutory liquidity ratio (SLR): SLR is the minimum proportion of their Net Demand and
Time Liabilities, which every bank maintains in the form of cash, gold and securities, at the
close of business every day.

Indirect Instruments:-

Bank rate: The rate of interest which the RBI charges on the loans and advances to a
commercial bank.
Liquidity adjustments facility (LAF): It’s a monetary policy tool which allows banks to
borrow money through repurchase agreements and adjusting the day to day mismatches in
liquidity.

Marginal standing facility (MSF): It’s a window for banks to borrow from the RBI in an
emergency situation when inter-bank liquidity finishes completely.

Market Stabilization scheme (MSS): Securities that are issued with the objective of providing
a stock of securities to the RBI to intervene in the market for managing liquidity.

Open Market Operations (OMO): It’s an activity by a RBI to give or take liquidity in its
currency to or from a bank or a group of banks.

Repo rate: The rate at which the RBI lends money to commercial banks in the event of any
shortfall of funds.

Reverse Repo Rate: The rate at which the RBI borrows money from commercial banks within
the country.

Term Repo: A repurchase agreement with a term of more than one day.

Money Market Instruments:-

Authorized Capital: The authorized capital/ registered capital/nominal capital of a company is
the maximum amount of share capital that the company is authorized by its constitutional
documents to issue to shareholders.

Bonds: It is an instrument of indebtedness of the bond issuer to the holders.

Call Money: Money loaned by a bank or other institution which is repayable on demand.

Commercial Bills: A bill of exchange issued by a commercial organization to raise money for
short-term needs.

Commercial Papers: An unsecured, short-term debt instrument issued by a corporation for the
financing of accounts receivable, inventories and meeting short-term liabilities.

Certificates of deposits (CD): A savings certificate entitling the bearer to receive interest.

Dated government securities: These are long-term securities and a fixed or floating
coupon/interest rate which is paid on the face value, payable at fixed time periods.

Debentures: A long-term security bearing a fixed rate of interest, issued by a company and
secured against assets.

Issued Capital: The share capital that has been issued to shareholders.

Mutual Funds: It is a professionally managed investment fund that pools money from many
investors to purchase securities.

Net Asset Value (NAV): A mutual fund’s price per share or exchange-traded fund’s (ETF) per-
share value.

Paid up Capital: The amount of a company’s capital that has been funded by shareholders.

Treasury bills: A short-dated UK/US government security, bearing no interest but issued at a
discount on its redemption price.

Negotiable Instruments:-
Bill of Exchange: A bill of exchange is a binding agreement by one party to pay a fixed amount
of cash to another party as of a predetermined date or on demand.

Cheques: An order to a bank to pay a stated sum from the drawer’s account, written on a
specially printed form.

Ante Dated Cheque: Cheques which have been written by the maker, and dated at some point
in the past.

Bounced Cheque: Check that cannot be processed because the writer has insufficient funds.

Crossed Cheque: These cheques can only be deposited directly into a bank account and cannot
be immediately cashed by a bank or any other credit institution.

Post Dated Cheque: Cheque that is written by the drawer (payer) for a date in the future.

Stale Cheque: A cheque which a bank will not accept and exchange for money or payment
because it was written more than a certain number of months ago.

Cheque Truncation: It is the conversion of a physical cheque into a substitute electronic form
for transmission to the paying bank.

Promissory Note: A financial instrument that contains a written promise by one party to pay
another party a definite sum of money either on demand or at a specified future date.

Various Types of Accounts:-

Current Account/Demand deposit Account: An active account catering for frequent deposits
and withdrawals by cheque.

DeMat Account: This account is opened by the investor while registering with an investment
broker (or sub-broker).

Fixed deposit account or time deposit account: It is a financial instrument provided by banks
which provides investors with a higher rate of interest than a regular savings account, until the
given maturity date.

NOSTRO Account: A bank account held by a UK bank with a foreign bank, usually in the
currency of that country.

Recurring Deposit Account: It is opened by those who want to save regularly for a certain
period of time and earn a higher interest rate.

Saving Account: A deposit account held at a bank or other financial institution that provides
principal security and a modest interest rate.

Foreign Trade:-
Current Account Deficit: A current account deficit is when a country’s government, businesses
and individuals import more goods, services and capital than they export.

Financial Inclusion: Financial inclusion is the delivery of financial services at affordable costs
to massive sections of disadvantaged and low income groups.

Fiscal Deficit: When a government’s total expenditures exceed the total revenue.

Foreign Direct Investment (FDI): It is a controlling ownership in a business enterprise in one

country by an entity, based in another country.

Foreign Institutional Investors (FII): FIIs are those institutional investors which invest in the
assets belonging to a different country other than that where these organizations are based.

General Anti-Avoidance Rules (GAAR): A GAAR is a statutory rule that empowers a revenue
authority to deny taxpayers the benefit of an arrangement that they have entered into for an
impermissible tax-related purpose.

Money Laundering: Any act to hide the identity of illegally obtained proceeds so that they
appear to have originated from genuine sources.
Participatory notes or P-Notes: These are instruments, issued by registered foreign
institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets
without registering themselves with the market regulator, the Securities and Exchange Board of
India (SEBI).

Quantitative easing and tapering: A monetary policy in which RBI purchases government
securities or other securities from the market in order to lower interest rates and increase the
money supply.

Electronic Payment Systems in Banks:-

National Payments Corporation of India (NPCI): NPCI is an umbrella organization for all retail
payments system in India.

Clearing Corporation of India Limited (CCIL): It is a joint stock company with share capital
contribution by major banks and financial institutions.

Electronic Clearing Service (ECS): ECS is an electronic mode of funds transfer from one bank
account to another and can be used for both

Electronic Funds Transfer (EFT): It is a system of transferring credit and debit

purposes.money from one bank account directly to another without any paper money changing
hands.

National Electronic Funds Transfer (NEFT) System: It is an Indian system of electronic

transfer of money from one bank or bank branch to another.

Real Time Gross Settlement (RTGS) System: These are specialist funds transfer systems
where the transfer of money or securities takes place from one bank to another on a “real time”
and on “gross” basis.

Important Organizations:-
International Bank for Reconstruction and Development (IBRD): An international financial
institution that offers loans to middle-income developing countries.

International Monetary Fund (IMF): An international organization that foster global

monetary cooperation, secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the world.

Bank for International Settlements (BIS): An international company, limited by shares owned
by central banks which look after international monetary and financial cooperation and serves as
a bank for central banks.
Asian Development Bank (ADB): A regional development bank to promote social and
economic development in Asia.

EXIM Bank: A premier export finance institution that works as both a catalyst and a key player
in the promotion of cross border trade and investment.

Reserve Bank of India (RBI): The central bank of India that is charged with regulating the
country’s currency and credit systems.

National Bank for Agriculture and Rural Development (NABARD): An apex development
bank that review arrangements for institutional credit for agriculture and rural development.

Industrial Development Bank of India (IDBI): An Indian government-owned financial service

company to provide credit and other financial facilities for the development of the fledgling
Indian industry.

Institute of Banking Personnel Selection (IBPS): An autonomous agency in India enhancing

human-resource development through personnel assessment selection and recruitment of
Officers and Clerks in Indian banks.

Indian Banks’ Association (IBA): A representative body of management of banking in India

operating in India.

Securities Exchange Board of India (SEBI): The regulatory body for the investment/securities
market in India.

National Housing Bank (NHB): An apex financial institution for housing.

Small Industries Development Bank of India (SIDBI): An independent financial institution

aimed to aid the growth and development of micro, small and medium-scale enterprises
(MSME) in India.

Other Essential Terms of Banking

Acquiring Bank: A bank or financial institution that processes credit or debit card payments on
behalf of a merchant.

Adjustable-Rate Mortgages (ARMS): The initial interest rate is normally fixed for a period of
time after which it is reset periodically, often every month.

Amortization: It is an accounting term that refers to the process of allocating the cost of an
intangible asset over a period of time.
Annuity: A fixed sum of money paid to someone each year, typically for the rest of their life.

Arbitrage: It is basically buying in one market and simultaneously selling in another, profiting
from a temporary difference.

Automated Teller Machine (ATM): A machine that automatically provides cash and performs
other banking services on insertion of a special card by the account holder.

Authorization: A document giving official permission.

Bancassurance: The selling of life assurance and other insurance products and services by
banking institutions.

Banker’s Lien: Type of charge that gives a bank automatic claim over a borrower’s property or
assets that come in bank’s possession in the normal course of its business.

BASEL Committee: A committee established by the Central Bank governors of the Group of
ten countries in 1974 that seeks to improve the supervisory guidelines that central banks or
similar authorities impose on both wholesale and retail banks.

Basis Point: One hundredth of one percentage point, basically used in expressing differences of
interest rates.

Blue Chips: They generally sell high-quality, widely accepted products and services.

Bull Markets: A market in which share prices are rising, encouraging buying.

CAMELs rating system: An international bank-rating system where bank supervisory

authorities rate institutions according to six factors. The six factors are represented by the
acronym “CAMELS”.

C – Capital adequacy

A – Asset quality

M – Management quality

E – Earnings

L – Liquidity

S – Sensitivity to Market Risk

Capital Adequacy Ratio: It is the ratio of a bank’s capital to its risk.

Capital Gain: A profit from the sale of property or an investment.

 Credit Rating Agencies of India: An independent company that evaluates the financial
condition of issuers of debt instruments.

Collateral: Property that a borrower offers a lender to secure a loan.

CORE Banking Solution (CBS): It is networking of branches, which enables Customers to

operate their accounts, and avail banking services from any branch of the Bank on CBS network,
regardless of where he maintains his account.

Coupon Frequency: The yield paid by a fixed income security.

Debtor: A person, country, or organization that owes money.

Derivative Instrument: Financial instruments whose value is derived from the value of
something else.

Demand Deposits: A deposit of money that can be withdrawn without prior notice.

Earnings per Share (EPS): The portion of a company’s profit allocated to each outstanding
share of common stock.

Earnings Yield: The quotient of earnings per share divided by the share price.

Equity: The value of an asset less the value of all liabilities on that asset.

Ex-dividend (XD): A security which no longer carries the right to the most recently declared
dividend.

Face Value: The nominal value of a security stated by the issuer.

Forfeiting: The purchasing of an exporter’s receivables at a discount by paying cash.

Forgery: It is the process of making, adapting, or imitating objects, statistics, or documents

with the intent to deceive for the sake of altering the public perception.

Garnishee Order: A legal procedure by which a creditor can collect what a debtor owes by
reaching the debtor’s property when it is in the hands of someone other than the debtor.

General Lien: The right to take another’s property if an obligation is not discharged.

Hedge: An investment to reduce the risk of adverse price movements in an asset.

Hypothecation: Refers to securities in a margin account that an investor uses as collateral to

borrow funds from a brokerage.
Indemnity: Security against a loss or other financial burden.

Initial Public Offering (IPO): It is a type of public offering in which shares of a company
usually are sold to institutional investors [1] that in turn, sell to the general public, on a securities
exchange, for the first time.

Insolvent: Insufficient to meet all debts, as an estate or fund.

Intrinsic Value: A value which exists as part of something, such as the value of an option.

Joint Account: Bank account in the name of two or more individuals who jointly share its
concomitant rights and liabilities. Joint holders of an account are regarded in law as together
making up the ‘owner.’

Junk Bond: The first sale of stock by a private company to the public.

Karta: Karta means manager of joint family and joint family properties.

Kiosk Banking: It is self-service solutions, allowing customers to service themselves with

computer based touchscreen and making different sort of transactions.

KYC Norms: The process of Banks verifying the identity of its clients.

Lease Financing: A legal document outlining the terms under which one party agrees to rent
property from another party.

Leverage Ratio: Ratio that measures a company’s leverage.

Libor: The interest rate that the banks charge each other for loans.

Listing: Reference of the Initial Public Offering Company’s shares on the stock exchange for
public trading.

Margin Call: A broker’s demand on an investor using margin to deposit additional money or
securities so that the margin account is brought up to the minimum maintenance margin.

Mandate: Written authorization by a person, group, or organization (the ‘mandator’) to another

(the ‘mandatary’) to take a certain course of action.

Micro credit/micro finance: The lending of small amounts of money at low interest to new
businesses.

Moratorium: The suspension of repayment of DEBT, or INTEREST, for a specified period of

time.

Non-Performing Assets (NPA): It is defined as a credit facility in for which the interest and/or
installment of Bond finance principal has remained “past due” for a specified period of time.

Negotiation: An act of transferring or assigning a money instrument from one person to another
person in the course of business.

Non-Resident Accounts: These are accounts maintained by Indian nationals and Persons of
Indian origin resident abroad, foreign nationals and foreign companies in India.

Notary Public: It is a public officer constituted by law to serve the public in non-contentious
matters usually concerned with estates, deeds, powers-of-attorney, and foreign and international
business.

Open Offer: It is an exit route, which is given to the existing shareholders by the acquirer of
shares through a public announcement.

Option: A financial derivative that represents a contract sold by one party to another party.

Par Value: The nominal value of a bond.

Personal Identification Number (PIN): A number allocated to an individual and used to

validate electronic transactions.

Pledge: It’s a kind of charge created when the lender (pledgee) takes actual possession of
assets.

Power of Attorney: It is a legal document that allows someone else to act on your behalf.

Portfolio: Refers to any collection of financial assets such as cash.

Preference Shares: It is a share which entitles the holder to a fixed dividend, whose payment
takes priority over that of ordinary share dividends.

Premium: The amount of money that an individual or business must pay for an insurance
policy.

Prime Lending Rate (PLR): The interest rate charged by banks to their largest, most secure,
and most creditworthy customers on short-term loans.

Privatization: The transfer of ownership, property or business from the government to the
private sector is termed privatization.

Provisioning: Can be defined as loss in the profit and loss account while finalizing accounts of
banks.
Relative Strength Index (RSI): It is a technical indicator used in the analysis of financial
markets.

Rights Issue: An issue of shares offered at a special price by a company to its existing
shareholders in proportion to their holding of old shares.

Rate of Return: The gain/loss on an investment, expressed as a percentage increase over the
initial investment cost, over a specified period.

Real Interest Rate: An interest rate that is adjusted for inflation.

Self Help Groups (SHGs): It is a village-based financial intermediary committee usually

composed of 10–20 local women or men.

Speculation: The act of trading in an asset, or conducting a financial transaction, expecting a

substantial gain, but with a risk of losing most or all of the initial outlay.

Stock Splits: A corporate action in which a company/Bank divides its existing shares into
multiple shares.

Substantial Shareholder: A person, who acquires an interest in relevant share capital equal to,
or exceeding, 10% of the share capital.

Teller: A person employed to deal with customers’ transactions in a bank.

Time Horizon: The length of time over which an investment is made or held before it is
liquidated.

Trust Deed: A formal document which outlines the terms of a trust agreement.

Time Horizon: The length of time over which an investment is made or held before it is
liquidated.

Underwriting: The process by which investment banks raise investment capital from investors
on behalf of corporations and governments by issuing securities.

Underlying Security: It is a financial instrument whose price is derived from a different asset.

Universal Banking: A banking system in which banks provide a wide variety of financial
services, including both commercial and investment services.

Valuation: The process of determining the current worth of an asset or property.

Virtual Banking: Handling all transactions of banks via the Web, e-mail, mobile check deposit
and ATM machines.
Warrant: Official guarantee by a bank.

Wholesale Banking: Banking services between merchant banks and other financial institutions.

Window Dressing: It refers to actions taken prior to issuing financial statements in order to
improve the appearance of the financial statements.

Yield to Maturity: It is the internal rate of return of an investment in a bond if the investor
holds the bond until maturity and if all payments are made as scheduled.

Zero Coupon Bond: A debt security that doesn’t pay interest but is traded at a deep discount,
rendering profit at maturity when the bond is redeemed for its full face value.

Q : What are your strengths & weakness?

A: This is a tricky question, wherein the interviewing panel want to know about you
in your own words.So do it right.

Strengths – Mention a quality about you that has some relation to the job or post
you applied for.
’I am very good in english’ can be said as ‘I have good communication skills &
hence can provide good service to customers
Weakness – Make sure to say something which will not show yourself in bad
light.Also describe about the steps taken to overcome that weakness in you.
‘I don't have any weakness’ means you are not ready to talk about it.
Similarly don't say something like, ‘Im short tempered & get angry very soon’ – It
gives an impression that you are not fit to work in group.

Q: Where do you see yourself after 5 years ?

A: This question would be asked to check how clear are you about the career path.
‘After 5 years,I want to be in your seat’ wont work in any case.Think realistically,
understand the growth opportunities of that job & put it across to them.
These are just few questions that can be asked during an Interview ,but the list is
exhaustive.So be prepared to answer any question with confidence.