Commercial Banking Interview Questions & Answers

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Commercial Banking Interview Questions & Answers

Are you in search of Commercial Banking Jobs? Then you are at the right place. We provide you with the complete Commercial banking interview Question and Answers on our page. A commercial bank is an institution that provides services such as accepting deposits, providing business loans, and offering basic investment products. There are numerous leading companies that offer various job positions in Commercial Banking like Manager PMO, Commercial Banking – Finance and Business Management Control Officer, Key Accounts manager, Head of new Initiative Commercial banking, President/ Chief Executive Officer- Commercial Banking, Business Analyst, Relationship Manager and many more positions. To avoid this confusion, we’ve framed Commercial banking job interview questions and answers to simplify your interview preparation. To know more visit our website Wisdomjobs.com.

Commercial Banking Interview Questions

Commercial Banking Interview Questions
    1. Question 1. What Are Investment Banks?

      Answer :

      An investment bank (IB) is a financial intermediary that performs a variety of services. Investment banks specialize in large and complex financial transactions such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations, and acting as a broker and/or financial adviser for institutional clients.

    2. Question 2. State The Sources And Application Of Funds Of Commercial Banks?

      Answer :

      Sources of Funds:

      • Share Capital
      • Reserves and Surplus
      • Deposits
      • Borrowings

      Application of Funds:

      • Cash and cash Balance with RBI
      • Cash balance with other banks
      • Investments
      • Advances Source

    3. Question 3. State The Role Commercial Banks?

      Answer :

      1. Mobilizing Saving for Capital Formation
      2. Financing Industry
      3. Financing Trade
      4. Financing Agriculture
      5. Financing Consumer Activities
      6. Financing Employment Generating Activities
      7. Help in Monetary Policy

    4. Question 4. Describe The Other Types Of Banks?

      Answer :

      Central banks are normally government owned and assigned with regulatory responsibilities, such as supervising commercial banks or controlling the cash interest rates etc.

      Islamic Banks are established in accordance of concepts of Islamic Law. This form of banking revolves around several well established principles based on Islamic canons.

    5. Question 5. What Is Cash Reserve Ratio?

      Answer :

      Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.

    6. Question 6. Describe The Nature Of Commercial Banks?

      Answer :

      • Commercial Banks are the organizations which cater certain financial transactions.
      • Its aim is to earn profit.
      • Transactions are socially and legally approved.
      • Responsible for customer deposits in the bank.
      • Established and operated under the control of central bank of a nation.

    7. Question 7. Give The Functions Of Commercial Banks?

      Answer :

      (1) Primary Function:

      • Accepting Deposits
      • Advancing of Loans
      • Credit Creation

      (2) Secondary Function:

      • Agency Functions
      • Public Utility Functions

    8. Question 8. List The Banks Under Retail Banks?

      Answer :

      1. Commercial Banks
      2. Community Banks
      3. Credit Union Banks
      4. Postal Saving Banks
      5. Ethical Banks

    9. Question 9. Give The Meaning Of Combined Banks?

      Answer :

      Combined Banks are also called as Universal banks. These are commonly known as financial services companies; engage in several of diversified financial services.

    10. Question 10. State The Meaning Of Commercial Banks?

      Answer :

      A commercial bank is a financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit.

    11. Question 11. What Is The Meaning Of Non Performing Asset (npa)?

      Answer :

      A loan or lease that is not meeting its stated principal and interest payments. Banks usually classify as nonperforming assets any commercial loans which are more than 90 days overdue and any consumer loans which are more than 180 days overdue. More generally, an asset which is not producing income.

    12. Question 12. State The Principles Of The Investment Policy Of Commercial Banks?

      Answer :

      1. Liquidity
      2. Profitability
      3. Safety
      4. Diversity
      5. Stability of securities

    13. Question 13. What Is The Meaning Of Capital Adequacy Ratio (car)?

      Answer :

      Percentage ratio of a financial institution's primary capital to its assets (loans and investments), used as a measure of its financial strength and stability. According to the Capital Adequacy Standard set by Bank for International Settlements (BIS), banks must have a primary capital base equal at least to eight percent of their assets: a bank that lends 12 dollars for every dollar of its capital is within the prescribed limits.

    14. Question 14. State The Purpose Of Narasimham Committee?

      Answer :

      1. To study all aspects relating to the structure and procedures of the financial systems.
      2. To recommend improvements in their efficiency and productivity.
      3. To reform the Indian Banking sector.

    15. Question 15. State The Discussion On Liquidity Vs Profitability?

      Answer :

      Profitability is the relationship between profits and capital (the "static" resources set aside to earn those profits). Measuring profitability means that you have to relate a profit figure (from the Profit and Loss Account) to a resources figure (from the Balance Sheet).

      Liquidity may be defined as the ability of a firm to meet its financial obligations as they fall due. The balance sheet (defined as "a structured statement of assets and liabilities")measures these resources and claims.

    16. Question 16. Name The Two Expert Committees Which Were Set Up In 1990s?

      Answer :

      The first Narasimham Committee was appointed by Manmohan Singh as India's Finance minister on 14th August 1991. And the second one was appointed by P.Chidambaram Finance minister in December 1997.

    17. Question 17. Give The List Of Commercial Banks In India?

      Answer :

      List of Commercial Banks in India:

      1. Reserve Bank of India 
      2. Abu Dhabi Commercial Bank 
      3. Allahabad Bank. 
      4. Andhra Bank 
      5. Bank of India 
      6. Bank of Madura 
      7. Bank of Punjab 
      8. Canara Bank 
      9. Chinatrust Commercial Bank 
      10. Citibank 
      11. City Union Bank 
      12. Corporation Bank

    18. Question 18. What Is The Meaning Of A Bank?

      Answer :

      An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customers.

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