Banking Operations Interview Questions & Answers

Banking Operations Interview Questions

Just finished with your management degree and looking for a banking operations job to gain on-the-job training along with high incentives, then you are at the right place. Wisdom jobs will provide you with a complete list of jobs available in the banking industry which is the fastest growing industry in India. Working for the bank operations, you will get an experience about the daily activities of the bank like cash management services, providing quality services to the customers and be ready for the audit checks. Bank operations also involve managing of various accounts, processing the transactions and examining the different financial documents. This experience will in turn help you to grow in the banking industry.  

The chances of getting a good pay and a high grade are more in private sector banks. You can also get a chance to work in overseas branches in some of the banks. Here are some of the well-designed banking operations interview questions and answers made by our professionals which will help you to make an impression in your interview:

Banking Operations Interview Questions And Answers

Banking Operations Interview Questions
    1. Question 1. Name Some Negotiable Instruments.?

      Answer :

      The negotiable instruments include: 

      • promissory note
      • bill of lading
      • Bank draft/ pay order/bankers cheque.
      • Railway receipts
      • Dock warrant
      • Warehouse receipt
      • Certificate of deposit
      • Commercial paper
      • Treasury bills
      • Hundi

    2. Question 2. What Are The Features Of Negotiability?

      Answer :

      Features of Negotiability:

      • Freely transferable by delivery (when it is bearer).
      • Freely transferable by endorsement (when it is an order instrument).
      • The transferee taking the instrument in good faith.

    3. Question 3. What Is Promissory Note (pn)?

      Answer :

      It’s an instrument in writing which contains an unconditional undertaking signed by the maker to pay a certain sum of money to the order or the bearer of instrument. The Promissory Notes require being stamped ad per Indian Stamp Act.

    4. Question 4. How Many Types Of Promissory Notes Are There?

      Answer :

      Types of Promissory Note:

      1. Demand Promissory Note
      2. Usance Promissory Note

    5. Question 5. What Is Demand Promissory Note?

      Answer :

      The Promissory Note which is payable immediately on demand is called “Demand Promissory Note”.

    6. Question 6. What Is Usance Promissory Note?

      Answer :

      The Promissory Note which is payable after a predefined definite period is called “Usance Promissory Note”.

    7. Question 7. How Many Parties Are Required In Promissory Notes?

      Answer :

      Basically it requires two parties. The one is maker who promises to pay and the other is payee to whom it is payable. For example a person take loan from the bank then the “person” is the “maker” and “the bank” is “payee”.

    8. Question 8. What Is “bill Of Exchange” (boe)?

      Answer :

      It’s an instrument containing an unconditional order signed by the maker directing a certain person to pay a certain sum of amount only to the bearer of that instrument.

    9. Question 9. How Many Types Of Bills Are Used In Banking Operations?

      Answer :

      Following are the types of Bills used in Banking Operations:

      • Inland bills and Foreign bills
      • Time bills and Demand bills
      • Trade bills and Accommodation bills
      • Clean bills and Documentary bills.

    10. Question 10. What Are “inland Bills”?

      Answer :

      Inland bills are contract agreements which define the information related to the transportation of goods overseas. Inland bills must be drawn on a person resident in India although it is payable outside India. The essential condition is that it must be drawn in India. For example a bill is drawn in Nagpur and payable in Hyderabad by an importer in New York is an inland bill.

    11. Question 11. What Is “foreign Bill”?

      Answer :

      A foreign bill is a financial instrument which is drawn at in country and payable in another country. Any bill which is not an inland bill is a “Foreign Bill”. For example a bill drawn in London and payable in Bhopal by a resident Indian is a foreign bill.

    12. Question 12. What Is “accommodation Bill”?

      Answer :

      Accommodation bill is the “bill of exchange” by the third party which is also known as an “Accommodation party” or “Accommodation endorser” who acts as a guarantor. This kind of bill is not a genuine trade bill and it is drawn to accommodate a known party. After actual sale of goods, when a bill is drawn by a seller and accepted by another person claim to be buyer is accommodation bill.

    13. Question 13. What Is “hundi”?

      Answer :

      Hundi is kind of “bill of exchange”. In Hundi any seller sells his good under bill of exchange. These bill of exchange are known as “Hundi”. Then the seller sends the “Hundi” to the buyer for its acceptance. These bills of exchange are generally written in native language of that place and governed by local usage and practices. Generally four types of Hundi are used.

      1. Darshani Hundi- It is similar to the demand bills.
      2. Miadi Hundi- It is similar to the usance bills.
      3. Namyog Hundis- It is similar to the order instruments.
      4. Khokha- which has been paid and cancelled.

    14. Question 14. What Is “cheque”?

      Answer :

      A cheque is an instrument drawn on a specified bank and it is only payable on demand.

    15. Question 15. How Is Cheque Is Different From Boe?

      Answer :

      Cheque is different from bill of exchange in following ways:

      • Cheque is valid only 6 months from the date of issue.
      • Cheque is payable to the bearer on demand.
      • Cheque is drawn in a bank.
      • Notice of dishonor is not necessary in cheque.

    16. Question 16. When Should Banks Not Pay The Cheque?

      Answer :

      Bank should not pay a cheque in the following cases:

      • Death of the drawer.
      • Insane customers
      • Insolvent customers
      • On receipt of valid stop payment instruction.
      • When cheque is post-dated.
      • When account has insufficient fund.

    17. Question 17. What Is Stale Cheque?

      Answer :

      If the cheque is not presented for payment for a period of 6 months from the date of its issuance, it is then considered as Stale Cheque.

      The validity of the cheque can be reduced by the drawer, like valid for 3 months but the maximum validity of any cheque is 6 months.

    18. Question 18. What Is “saving Bank Account”?

      Answer :

      If a person has limited income and he wants to save some money for future, then the account he opens is a Saving Bank Account. The account can be opened with the minimum initial deposit amount decided by the bank. The account holder can deposit the money anytime. He can also withdraw the money by withdrawal form or ATM or cheque. The rate of interest varies from bank to bank and changes time to time.

    19. Question 19. What Is “current Deposit Account”?

      Answer :

      Big institutions, companies, businessman etc. normally open their current deposit accounts. There are some restrictions on withdrawal in saving accounts and in current accounts there are no such restrictions.

      Current account can be opened with some initial amount decided by the bank. Here the bank does not pay any interest on their balance, in fact the bank charges the customer certain amount each year as Operational Charge. It also provides the facility of withdrawing excess of the balance of deposit.

    20. Question 20. What Is “overdraft Facility”?

      Answer :

      It is a facility provided by the banks that permits an account holder to use or withdraw more than they have in their accounts, but they can’t withdraw exceeding the maximum minus balance.This facility is called Overdraft Facility.

    21. Question 21. What Is “fixed Deposit Account”?

      Answer :

      This facility allows us to save money for long time. In saving accounts the rate of interest is less, but in fixed deposit account the rate of interest is higher. It is also known as term deposit account. The depositor can deposit the money for long periods like 7 to 10 years. During this period withdrawal is not allowed however the depositor can encash the money before the maturity period but at that time the rate of interest will be less.

    22. Question 22. What Is “recurring Deposit Account”?

      Answer :

      In this type of account the depositor saves regularly and in return gets a fair return of deposit. While opening this account the deposit per month is fixed. We can deposit the amount once in the month on a fixed date and the amount is also fixed. The total amount with interest we can receive after the maturity. The rate of interest in recurring deposit account is higher than the saving account. The account can be opened by a person individually as well as jointly with another.

    23. Question 23. What Are “non- Performing Assets” (npa)?

      Answer :

      The asset which is not producing income is a “Non-Performing Asset”. It is an asset or an account of a borrower which is considered as loss asset or doubtful by the bank account or the financial institution is called “non-performing asset”.

    24. Question 24. What Is 90 Days Overdue?

      Answer :

      It’s a norm for the identification of the “Non-performing asset” (NPA) starting 31 March 2014.

      The norm is as follow:

      • Interest or installment of principal remain overdue for more than ninety days in respect of term loan.
      • The account remains out of order for the period of more than ninety days.
      • The bill remains overdue for the period of more than ninety days.
      • Any amount to be received is due for more than ninety days.

    25. Question 25. What Is “money Laundering”?

      Answer :

      The process of converting illegal money into legal money is Money Laundering. According to Section 3 of the Prevention of Money laundering Act 2002 as:

      “Whosoever directly or indirectly attempts to indulge or knowingly assists or is involved in any process or activity connected with the proceeds of crime and is projecting it as the untainted property shall be guilty of the offence of money laundering”.

    26. Question 26. What Are The Common Factors Of “money Laundering”?

      Answer :

      Generally there are four factors of money laundering:

      • The true ownership and real source of money is not revealed.
      • The launderers change the form of the proceeds in order to shrink the huge volume of cash generated by the initial unlawful activity.
      • The trail left by the process is not known so that it make it difficult to follow the money from the beginning to end.
      • Constant control is maintained on the money.

    27. Question 27. What Are The Stages Of “money Laundering” Process?

      Answer :

      The following are the stages of “money laundering” process:

      1. Placement stage:-It is the first introduction of entry for funds derived for any criminal activities.
      2. Layering/Agitation stage: - The object of this stage is to prevent the tracing of illegal proceed. It creates a complex network of transactions which attempts to not reveal the link between the initial entry and the end of the money laundering cycle.
      3. Integration stage: - This process achieves the appearance of total legitimacy of funds thereby it refers to the return of funds to the legitimate economy for later extraction.

    28. Question 28. Give Few Ways Of “money Laundering”?

      Answer :

      Following are the few ways of money laundering:-

      • Frequent exchange of cash into other currencies.
      • Large withdrawals from inactive account.
      • Transferring large sum of money to or from abroad.
      • More use of safe deposit facilities.
      • Customer having several accounts in different banks but in same location.

    29. Question 29. What Is “banknet”?

      Answer :

      It’s a kind of payment network established by RBI. It was launched during 1991 in India. In this network the user can BANKNET from their premises through leased or dial up lines at the local centers. Here the messages of banking transactions are transferred in the form of codes for the settlement of the transaction and advice. It also provides access to SWIFT through its system.

    30. Question 30. What Is “rbinet”?

      Answer :

      It is a communication system running on BANKNET and RBINET is a client running a personal computer called RBINET. It can communicate with its server over the dedicated leased or dial-up lines.

    31. Question 31. What Is “i-net”?

      Answer :

      I-net was opened in 1983. It is owned by the Department of Telecommunication which uses Packet Switching Public Data Network (PSPDN). PSPDN is a kind of data sending technology. I-net uses telephone connections and satellites for communication which replaces the slow speed data communication. This technology connects major metropolis and international networks.

    32. Question 32. What Is “nicnet”?

      Answer :

      NICNET stands for National Informatic Centre Network, which was set up in 1975. It promotes information culture which is a government organization and work for government organizations. It provides multiple facilities to finance, agriculture, industry, commerce by providing various applications. Currency chest operations in banks are performed by NICNET.

    33. Question 33. What Is “infinet”?

      Answer :

      The abbreviation for INFINET is Indian Financial Network. It was developed by RBI sponsored organization which provides fast and secure intra –bank and inter-bank communication system.

    34. Question 34. What Is “spns”?

      Answer :

      The full form of SPNS is Shared Payment Network System. It provides round-the-clock banking convenience to customer of any bank performing basic banking functions like cash withdrawal, balance enquiry etc. at any ATM belonging to any bank.

    35. Question 35. Which Banking Services Can Be Used Through Information Technology (it)?

      Answer :

      Following banking services can be achieved by using IT:

      • Faster remittance services
      • Home banking
      • Tele- banking
      • Cash management products
      • Banking online

    36. Question 36. What Is “digital Signatures” (ds)?

      Answer :

      Digital Signature is used for security purpose and it is equivalent to the handwritten signature. It is a signature in electronic form attached to an electronic record. Digital signature identifies the origin of the message and maintain the integrity of message. It defines authentication of an electronic record by a person whose name the digital signature certificates. In India Information Technology Act 2000 considers digital signature as personalized thumb print.

    37. Question 37. What Is “mobile Banking”?

      Answer :

      Mobile banking provides us the ease of carrying out certain banking transactions through their mobile phone. This facility is provided by the banks. Many operations can be performed by using mobile banking like checking account balance, paying bills, request for cheque book. Stop payment instruction, summaries of last three transactions, transferring money to other account etc.

    38. Question 38. What Is “electronic Fund Transfer System” (efts)?

      Answer :

      Electronic fund transfer provides us to transfer fund electronically replacing the paper instruments. The electronic fund transfer is fast and easily available. It saves time of customer’s standing in queue.

      The products of EFTS includes:- 

      • WTs- wireless transfers.
      • ATM- Automated Trailer Machine
      • CDs- Cash Dispensers
      • POS- Point of Sale terminals
      • Home banking

    39. Question 39. What Is “smart Card”?

      Answer :

      The Smart Card is an Integrated Circuit Card (ICC) to store information. It is a cash card or we can say ‘electronic purse’ which is a pre-paid cash card. The card provides an option to the customers for debit and credit facilities. These cards can be reloaded by ATM or by telephone. It reduces the need of carrying cash for shopping and enables the card holder to increase the amount at any time.

    40. Question 40. What Is “credit Card”?

      Answer :

      It is an instrument of payment. The customer gets some credit on the card which he can use for shopping, ticket booking, encashment etc. The credit cards are of different types having different credit limits depending upon the bank.

    41. Question 41. What Is “debit Card”?

      Answer :

      It is a payment card used to obtain cash, purchasing goods and services automatically debiting the payment to the card holder’s bank account.

    42. Question 42. What Are The Advantages Of “debit Card”?

      Answer :

      The advantages of Debit Card:

      • No need to carry cash.
      • Quick and less complicated than using cheque.
      • Used for withdrawal of cash.
      • It can be issued to any individual having bank account.

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