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Here we are presenting to you all Interview Capsule for UBI Interview. This
capsule includes all what you need to face an Interview. Go through this capsule
thoroughly as it will be really helpful for interview. We covered everything from
personal questions to each and every banking concept.
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Interview Capsule – UBI
Table of Contents
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Interview Capsule – UBI
In a Bank PO interview, the aim of the interviewers is to assess your personality, your attitude and your
ability to handle the pressure. Before you go for an interview you need to prepare yourself well. This is
because in the process of an interview every aspect of yours will be analysed. Whatever you have to say
about yourself will be evaluated minutely.
Please remember that interviewers are well known about your knowledge on the basis of your written
marks, they only want to know your behaviour, attitude and approach.
So be cool and present yourself in a positive and polite manner. Be confident about what you saying.
1. About banks Date of Establishment, HO Place, Date of Nationalisation (if nationalized), Name
of bank before nationalization (if any), Paid-up Capital and worth of the bank, Number of
branches in India and abroad etc. Basically you have to know history, services, products,
achievement, management (name of CMD) etc of banks
2. International and national information on banking industry.
3. Brief information of Banking Regulation Act, RBI Act , Negotiable Instrument Act, Basic
Banking Knowledge: Banking, Banking Business, Debit and Credit, Types of Banks, Banking
Terms, Banking Reforms in India, Computerisation in India, Types of Accounts, Customer,
Currencies, Foreign Exchange, Types of loan accounts, Banking Technology and its
implementation, Banking Innovative Products, Third Party Products etc.
4. Keep updated. Most of the questions that the panel members ask are from the current affairs
something inappropriate which you may regret later. Also remember to speak in a polite and
respectful manner.
6. Do not rush while speaking. Speak in calm and composed manner so that you may not utter
something inappropriate which you may regret later. Also remember to speak in a polite and
respectful manner.
7. Be prepared for situation based questions related to personal life and resolving critical issues.
wear clean and wrinkle free sober suits. Women should not wear any floral dresses. It should
be simple and sober.
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Interview Capsule – UBI
Personal Questions:
My name is XYZ. I was born and brought up in ABC. I did my schooling from ___. I have completed my
graduation in ____from ____. I like to be disciplined in all walks of life. I like speaking in a polite manner
which at times makes a good impression on others. I am always ready to listen to others and easy to get
along with them. I coordinated the events in my college fest so you can also think me of as a good leader.
My role model is _________ who is ______ (you can also add achievements here). My strength is I can
easily adopt things in life and my weakness is sometimes I end up a little bit of overdoing to complete my
work and i hate procrastination.
Answer: I am always fascinated towards the banking industry specially the role a banker plays as they reach
to the public directly. Moreover banking is one of the most reputed and fastest growing sector in India which
gives immense career growth opportunity to an individual, respect in society and job security. Being a
banker I can fulfil my own dreams as well as I can give the best in me to the bank by providing appropriate
services to the customers.
What is a Bank?
Attention: Don’t mug up from books or sites try to answer it in your style.
e.g. Banking is one of the most essential part in one’s life as it deals with cash and cash transactions.
Financial needs are equally important in life for enjoying a comfortable economic status. So it plays a vital
role for all of us.
They are not looking to hear about your personal aspirations e.g. what you want to be and what you will do
in upcoming 5 years. They want to know if you are willing to stick around the company and grow
professionally and solve their problems or not. Tell them you see yourself in the role of Manager in MMG
Scale-II. Be sure about the responsibilities of Manager MMG Scale-II. While answering you should express
that you plan on staying at the Bank for a long time. Demonstrate some of you key strengths and how you
plan on enhancing those strengths through employment with that particular bank.
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Sir, I share some of the same values which this corporation is looking in Probationary Officers like customer
orientation skills, multitasking ability and ready to accept challenges. I would like to take these values to a
superior level. I’ve been preparing for this position and excited about the opportunity to work with the bank.
Attention: Speaking anything negative about your past employers would cast back badly on you. So, don’t
slander anyone.
I am thankful to my previous organisation, gave me an opportunity to work with them. I have learned a lot
of things how to work under pressure with confidence and how to make relationship with co-workers
professionally. Now I'm looking for better opportunity to enhance my skills and ability along with company
growth.
The interviewer is hoping you might be the solution to their problems. List your main skills and how these
will be directly applicable if you get the job. Recheck the same question as, "What your strengths are and
what our company strengths are?
If there is something common, cite that as synergy. If there is nothing common, mention that you bring new
set of strengths to the table.
Some very respectable and admirable interviewers appreciate it if you honestly say that you haven't achieved
anything considerable yet and that you are all set to go out and prove yourself and that the concerned
company will provide you a platform for it. Most of the interviewers will expect you to impress them. So it
is always better to have a decent answer ready and prepared.
For example, you might have been part of a team that had organized a college fest for example or a
technical symposium for your department. For all I know, you might have just signed up for that to get out
of classes and sit in the canteen but you can make up a believable crisis situation and a way out and narrate it
to them. There are many more such options. Just sit down and let your creativity flow.
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This question is a great opportunity to sell yourself and your accomplishments. The answer varies if you're a
fresh graduate as opposed to a senior professional. Regardless you should include
2. Why you're a good fit: Employers like to know that you've taken the time to understand their
organisation. So take this time to co-relate things you've done in the past with the things the company is
trying to achieve.
3. You get things done: This is the most important ability an employer is looking for. The ability to get
things done, no matter the obstacles. Give some examples from the past.
Answer like this - As I am a fresher, I have theoretical knowledge but I can do hard work for my
organization and I will put all my efforts for the good progress of organization. Being punctual and sincere, I
can finish the work given to me on time and try my best to fulfil all needs of company from me.
If you have any genuine questions, you can ask. Otherwise, just say “thank you” and leave. You can ask
about the job challenges while emphasizing that you like to be motivated by well-focused daily work
challenges, multi-tasking and even pressure.
Headquarters: Kolkata
Tagline: The Bank that begins with ‘U’
Key people: P. Srinivas (MD & CEO), Shri K.V.Rama Murthy (ED), Shri Sanjay Arya
(ED)
United Bank of India is one of the 14 banks which were nationalised on July 19, 1969. On October 12,
1950, the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company
Limited) was changed to United Bank of India Limited for the purpose of amalgamation and on December
18, 1950, Comilla Banking Corporation Limited (established in 1914), the Camilla Union Bank Limited
(established in 1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank.
Subsequently, other banks namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindusthan
Mercantile Limited and Narang Bank of India Limited were merged with the Bank.
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• Bank is 100% CBS enabled with 1999 branches and offices and is having a Total business of more
than Rs 2 lac crore. Presently the Bank is having a Three-tier organisational set-up consisting of the
Head Office, 35 Regional Offices and the Branches.
• At present it is the Lead Bank in 30 districts in the States of West Bengal, Assam, Manipur and
Tripura.
• UBI has sponsored 4 Regional Rural Banks (RRB) one each in West Bengal, Assam, Manipur and
Tripura.
• UBI is also known as the 'Tea Bank' because of its age-old association with the financing of tea
gardens. It has been the largest lender to the tea industry.
• The Bank has three full fledged Overseas Branches one each at Kolkata, New Delhi and Mumbai
with fully equipped dealing room and SWIFT terminal .
Mobile App:
UBI offers ‘’mPay’’ solution the next generation mobile banking service. Features offered are Balance
Inquiry (With combined Available Balance), Mini Statement (Last 9 transactions with available balance),
Intrabank Funds Transfer (Mobile to Mobile, Mobile to Account), NEFT, Interbank Mobile Payment
(IMPS), Offline Service Requests, etc.
MUTUAL FUNDS
United Bank of India is into the distribution of various Mutual Fund Schemes of the following leading
Asset Management Company (AMCs):
UTI Mutual Fund, HDFC Mutual Fund, Franklin Templeton Investments, ICICI Prudential Mutual Fund,
Reliance Mutual Fund, Kotak Mahindra Mutual Fund, SBI mutual Fund, PNB Principal Mutual Fund ,
Peerless Mutual Funds
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Banking Notes
What is a Bank?
Suppose you have got Rs.1,000 you don’t need for or say for a year and want to earn income from the
money until then or you want to buy a house and need to borrow Rs.100,000 and pay it back over 20
years.
It would be difficult for someone acting alone to find either a potential borrower who needs exactly
Rs.1,000 for a year or a lender who can spare Rs.100,000 for 20 years. That’s where banks come in.
“Bank is a financial institution that undertakes the banking activity i.e. it accepts deposits and then
lends the same to earn certain profit.”
Now-a-days, banking sector acts as the backbone of modern business. Development of any country
mainly depends upon the banking system.
1) Loans: Lending loans to borrowers from the public is a major way for commercial banks to earn money.
These could be personal loan, home loan, car loan and other type of mortgages. Banks generally restrict the
amount of withdrawals to remain solvent, especially for forwarding loans. This ensures that the money
remains within the bank. The amount is lent to a person at a higher interest rate for a fixed period of time. As
the loan amount starts getting recovered, the bank pays a portion of the interest value to other depositors and
keeps the remaining as its earning.
2) Credit Cards: Credit cards are unsecured loans extended by a commercial bank with the sole intention of
earning heavy interest. Availing a credit card, limited or unlimited value, gives the person access to
immediate funds and the person is charged premium fees by the bank for extending this facility.
3) Public Deposits: Money kept by the public in savings and checking accounts is the largest source of
funds for commercial banks. The amount accountholders entrust the bank with safekeeping earns them a
very basic interest amount. These deposits are pooled together and loaned out to other individuals or
invested elsewhere. The banks earn interest money and share the basic percentage with the savings or
checking account holder.
4) Service Fees: Commercial banks levy service fees on its customers and even though the service fees are
marginal, it forms a large chunk of commercial bank earning medium. Commercial banks charge service
fees for ATM’s, overdrafts, operating a simple savings account, issuing debit cards, renewing debit
cards, accessing internet banking and mobile banking, issuing checks, maintaining bank lockers and
more. These fees are unavoidable since every commercial bank charges them.
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● Intermediary: Banks act as an intermediary between depositors (who lend money to the bank)
and borrowers(to whom the bank lends money). The amount banks pay for deposits and the
income they receive on their loans are both called interest.
Accounts can be opened in two ways: Going to a bank branch or though Business Correspondents (BCs).
Business correspondents are the individuals or any other entities just like insurance agents and reach the
people in far flung or remote areas which are unbanked areas. They are called bank representatives. They
help the people in any banking activity like opening accounts, depositing money, withdrawing money, give
away loan, or any other transaction.
Sometimes opening a bank branch in village or remote areas is not feasible, so a BC model was initiated by
RBI.
Functions of Banks
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So the difference between the two is that if you give letter of credit to seller, that will ensure that bank will
pay on your behalf up to the day the services are being provided to you by the seller and if you give bank
guarantee to seller, that will ensure that bank will pay on your behalf if you are not able to pay the amount.
Insolvency Vs Bankruptcy
When a person/organization is unable to pay their debts when they become due and payable, it is called
insolvency.
When a person/organization is unable to pay their debts when they become due and payable and is also
declared as bankrupt by court, it is called bankruptcy.
All bankrupts will be called insolvent, but not vice-versa.
FDI Vs FII
Foreign Direct Investment (FDI) as the name suggests is investing directly in another country. A foreign
company which is based in some other country like France invests in India either by setting up a wholly
owned subsidiary or getting into a joint venture with some company based in India and then conducts its
business in India.
Examples: IBM India, Maruti Suzuki, SBI life insurance, etc
Foreign Institutional Investor (FII) is similar to FDI in a way that this is also direct investment but
investment in only financial assets such as stocks, bonds etc. of a company located in another country.
Example: Any foreign company invests in the shares of Infosys (based in India).
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Unlike cross selling, up selling means encouraging customers to purchase a higher-end product or we can
say a more costly product than the customer has asked for. Like the customer asks for a credit card with
overdraft facility of Rs 10,000 but the banking representative tells him benefits of having the card with more
facilities, etc.
NRO Account: Non Resident Ordinary (NRO) account is a Savings Account or Current Account or Fixed
Deposit Account or Recurring Deposit account opened by NRIs and PIOs. It is a rupee denominated account
i.e. the amount in the account is maintained in Indian Rupees.
NRE Account: Non Resident External (NRE) account is a rupee denominated account which can be
Savings Account or Current Account or Fixed Deposit Account or Recurring Deposit account opened by
NRIs and PIOs.
FCNR Account: Foreign Currency Non Resident (FCNR) account is a term deposit account that can be
maintained by NRIs and PIOs in foreign currency. So this means it is not a savings account. Authorized
dealer banks in India can allow deposits in any of the permitted currency (currency freely convertible).
A cheque is bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on
demand and cheque also includes the electronic image of a truncated cheque and a cheque in the electronic
form.
Also known as DD, it is kind of a pre-paid negotiable instrument that is used to direct payments from one
bank to another bank or one of its own branches to pay a certain sum to the specified party.
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Types of Cheques:
Order Cheque: A cheque which is payable to a particular person on his order is called an order cheque.
This is a cheque whereby the printed word Bearer on the cheque is cancelled. The cancellation of the word
Bearer automatically makes the cheque an order cheque.
Bearer Cheque: A cheque which is payable to a person whosoever bears, is called bearer cheque. The
cheque sometimes can be made payable to “Cash” or bearer or made payable to a specific name.
Stale Cheque: Check presented at the paying bank after a certain period typically six months of its payment
date. A stale check is not an invalid check, but it may be deemed an ‘irregular’ bill of exchange. A bank may
refuse to honor it unless its drawer reconfirms it payment either by inserting a new payment date or by
issuing a new check. Also called stale dated check.
Multilated Cheque: If a cheque is torn into two or more pieces such cheque is Mutilated Cheque. If it
presented for payment, such a cheque the bank will not make payment against such a cheque without getting
confirmation of the drawer. In case, if a cheque is torn at the corners and no material fact is erased or
cancelled, the bank may make payment against such a cheque.
Post Dated Cheque: If a cheque bears a date later than the date of issue, it is termed as post dated cheque.
Any check or draft that has a future date written upon it by the user. The amount of the check will not be
drawn from the account until the date written on the check. For example, a check written on the 14th of the
month but dated for the 28th will not be cashed for another two weeks.
Open Cheque: A cheque that is not a crossed cheque. The person whose name appears on the cheque can
write the name of another person on it, and the money will be paid to them. An open cheque is a cheque that
is not crossed on the left corner and payable at the drawee bank on presentation of the cheque.
Crossed Cheque: A crossed cheque is one which has two short parallel lines marked across its face. A
cheque which carries too parallel transverse lines across the face of the cheque with or without the words “I
and co”, is said to be crossed. Crossed cheques are of two types. By simply crossing a cheque or with the
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words ” & Co”, by the payer, the payee can either deposit it in his/her account or endorse it in favour of
another person on the reverse. This practice is nowadays not accepted by the banks.
Negotiable Instruments
Negotiable instrument is a document which guarantees the payment of a specific amount of money, either on
demand, or at a set time, with the payer named on the document. A negotiable instrument can be transferred
from one person to another.
According to Section 13 of the Negotiable Instruments Act, 1881, “A Negotiable Instrument means a
promissory note, bill of exchange or cheque payable either to order or to bearer.”
Proof of identity: Six documents as Officially Valid Documents (OVDs) for the purpose of producing
proof of identity. These six documents are
● Passport
● Driving Licence
● Voters’ Identity Card
● PAN Card
● Aadhaar Card issued by UIDAI
● NREGA Card
One need to submit any one of these documents as proof of identity. If these documents also contain
one’s address details, then it would be accepted as proof of address. If the document submitted by person
for proof of identity does not contain address details, then he/she will have to submit another officially
valid document which contains address details.
*If one does not have any of the documents listed above to show my ‘proof of identity’
He/She can still open a bank account known as Small Account by submitting recent photograph and
putting signature or thumb impression in the presence of the bank official.
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What is e-KYC?
e-KYC refers to electronic KYC. e-KYC is possible only for those who have Aadhaar numbers.
1. The RBI logo was inspired from the East India Company Double Mohur.
2. Formed on April 1, 1935 as a private entity, but is a government entity now. Nationalization of the central
bank did not happen till 1949.
3. The financial year of RBI is from 1 July to 30 June.
4. The first woman to become the deputy governor of RBI is K. J. Udeshi.
5. RBI demonetized notes in the denominations of Rs. 5,000 and Rs. 10,000 in 1938. They were
reintroduced in 1954 and again demonetized in 1978. RBI can print these notes according to the RBI act of
1934.
6. RBI was also the central bank for two other countries. It played the role of Central Bank of Pakistan till
June 1948 and the Central Bank of Burma ( Myanmar) till April 1947.
7. The bank was established on the recommendation of the Hilton Young Commission.
8. Manmohan Singh is the only Prime Minister to have also served as the Governor of RBI.
9. The first Indian to hold the position of the Governor of RBI was Mr. C.D. Deshmukh. He was the third
governor of RBI.
10. RBI runs a Monetary Museum in the premises of the Mumbai head office.
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4 subsidiaries as: Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), DICGC,
NABARD, and National Housing Bank.
BRBNMPL: It was established with a view to produce bank notes in India and enable RBI to bridge the gap
between the supply and demand for bank notes in the country.
The company manages 2 Presses: Mysore in Karnataka and Salboni in West Bengal.
Objectives of RBI:
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What is Nationalization?
Nationalization is a process whereby a national government or State takes over the private industry,
organisation or assets into public ownership by an Act or ordinance or some other kind of orders. This
strategy has been frequently adopted by socialist governments for transition from capitalism to socialism.
In India since independence following major nationalizations have taken place
● 1770 : First bank Bank of Hindustan.
● 1949 : RBI was nationalized (RBI was state owned at the time of Indian independence).
● 1955 : Control of Imperial Bank of India was acquired by RBI
● 1969 : 14 Indian private banks were nationalised
● 1972 : 106 insurance companies were nationalised into four insurance companies
● 1980 : 6 more Indian private banks were nationalised
● 1993: New Bank of India Merged into Punjab National Bank
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The Indian banking sector is classified into scheduled banks and non-scheduled banks.
All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are
Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative
Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban
Cooperative Banks.
Scheduled Commercial Banks in India are categorized into five different groups:
● State Bank of India and its Associates
● Nationalised Banks
● Private Sector Banks
● Foreign Banks
● Regional Rural Banks
● However despite the technological challenges the public sector banks in India are still the
preferred destinations for many as they are considered as safer options for money deposit.
What are Foreign Banks?
A foreign bank is a bank with head office outside the country in which it is located. e.g. Standard
Chartered Bank.
What are Regional Rural Banks?
After nationalization, of banks in 1960 there were problems which made it difficult for commercial banks
even under government ownership to lend to farmers. Government set up Narasimham Working Group in
1975. On the basis of this committee’s recommendations, a Regional Rural Banks Ordinance was
promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976.
First RRB: Prathama Grameen Bank
The RRBs were owned by three entities with their respective shares as follows:
● Central Government → 50%
● State government → 15%
● Sponsor bank → 35%
NABARD
NABARD is an apex development bank, established in 1982 by a Special Act of the Parliament, with a
mandate to uplift rural India by facilitating credit flow in agriculture, cottage and village industries,
handicrafts and small-scale industries. NABARD functions to promote sustainable rural development for
attaining prosperity of rural areas in India.
RBI has sold its own stake to the Government of India. Therefore, Government of India holds 99% stake in
NABARD.
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● It has power to deal with all matters concerning policy, planning as well as operations in giving
credit for agriculture and other economic activities in the rural areas.
● A refinancing agency for those institutions that provide investment and production credit for
promoting the several developmental programs for rural development.
● Improving the absorptive capacity of the credit delivery system in India, including monitoring,
formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.
● Co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental
work at the field level.
● Prepares rural credit plans, annually, for all districts in the country.
● Promotes research in rural banking, and the field of agriculture and rural development.
IDBI
Industrial Development Bank of India (IDBI) came into being on 1st July, 1964 as a Development Financial
Institutions under IDBI Act 1964.
*Key points:
● Regarded as a Public Financial Institution in terms of Companies Act. It continued as DFI till 2004
when it was transferred into a Bank. To transform this into Bank Industrial Development Bank
Act 2003 was passed.
● A new company under the name of Industrial Development Bank of India Ltd. was incorporated as a
Govt company under the Companies Act on 27th September, 2004, and thus now it came to be
known as IDBI Ltd wef 1st October 2004 but it also worked as a Bank in terms of the Repeal Act.
● W.e.f. 2nd April, 2005, IDBI Bank Ltd. was finally amalgamated with IDBI Ltd. and was known as
IDBI Ltd. It is a Public Sector Bank as GoI has above 70% shareholding in this Bank.
SIDBI
Small Industries Development Bank of India (SIDBI) was set up under an Act of Parliament in 1990.
Though it was a wholly owned subsidiary of Industrial Development Bank of India, presently the ownership
is held by 33 Government of India owned / controlled institutions.
Functions:
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● Grant loans only to public limited companies and co-operatives but not to private limited companies
or partnership firms.
EXIM
Export-Import Bank (Exim bank) was set up in 1982 to take over the operations of international finance
wing of the IDBI and to provide financial assistance to exporters and importers.
The authorised capital of Exim bank is Rs. 200 crore and paid-up-capital is Rs. 100 crore wholly
subscribed by the Central Government.
Functions
● Provides direct financial assistance to exporters of plant, machinery and related service in the form
of medium-term credit.
● Provides rediscount of export bills for a period not exceeding 90 days against short-term usance
export bills discounted by commercial banks.
● Gives overseas buyers credit to foreign importers for import of Indian capital goods and related
services.
● Developing and financing export oriented industries.
● Collecting and compiling the market and credit information about foreign trade.
NHB
National Housing Bank(NHB), a wholly owned subsidiary of Reserve Bank of India (RBI), was set up by
an Act of Parliament in 1987.
NHB is an apex financial institution for housing. It commenced its operations in 1988.
Objective:
● To promote housing finance institutions both at local and regional levels and to provide financial and
other support incidental to such institutions and for matters connected therewith
● NHB registers, regulates and supervises Housing Finance Company (HFCs), keeps surveillance
through On-site & Off-site Mechanisms and coordinates with other Regulators.
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● Stability ● Growth
● Objective: To deal with all the issues ● Objective: To lessen poverty and
related to the financial sector and promote the long term development of
macroeconomics. the economy.
● You go to the IMF when you are so ● You go to the World Bank when you
messed up that your currency is want to build a dam or power plant or
dropping like crazy. IMF comes and a road.
usually fixes stuff along with advice.
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IDA(International Development Association): This is a grant body. No interest and usually countries
are given long periods for repaying. The focus is on social projects such as immunization and education,
open only for the poorest nations.
*Key point: There is no Ombudsman for hearing complaints against NBFCs. In respect of credit card
operations of an NBFC, which is a subsidiary of a bank if a complainant does not get satisfactory response
from the NBFC within a maximum period of thirty 30days from the date of lodging the complaint, the
customer will have the option to approach the Office of the concerned Banking Ombudsman for
redressal of his grievances.
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Banking Ombudsman
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer
complaints against deficiency in certain banking services.
*Key points:
● One can file a complaint if the reply is not received from the bank within a period of one month
after the bank rejects the complaint or if the complainant is not satisfied with the reply given by the
bank.
● Compensation to be paid by the bank to the complainant is limited to the amount arising directly out
of the act or omission of the bank or Rs 10 lakhs, whichever is lower.
● Compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating
to credit card operations for mental agony and harassment.
● If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the
appellate authority vested with a Deputy Governor of the RBI.
It was established with a view to produce bank notes in India and enable RBI to bridge the gap between the
supply and demand for bank notes in the country.
The company manages 2 Presses: Mysore in Karnataka and Salboni in West Bengal.
The machinery at Mysore Site has been supplied by Switzerland and that of Salboni by Japan.
Minting of coins
According to the Coinage Act, 1906, the Government of India has the sole right to mint coins. GOI supplies
the coins to Reserve Bank of India which then circulates the coins.
The work of SPMCIL includes manufacturing of security paper, minting of coins, printing of currency and
bank notes, non-judicial stamp papers, postage stamps, travel documents, etc.
Printing Presses:
There are 4 printing presses in the country which are
• Currency Note Press, Nashik Road
• Bank Note Press, Dewas
• India Security Press, Nashik
• Security Printing Press, Hyderabad
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Paper Mill
The Security Paper Mill (SPM), Hoshangabad is responsible for manufacturing of different types of Security
Papers.
Aim: To bring financial stability to the banking system through deposit insurance, special for the benefit of
small depositors. So it is a deposit insurance provider for small depositors.
Key points:
● Maximum deposit amount insured by the DICGC Each depositor in a bank is insured upto a
maximum of Rs.1,00,000
● If you have deposits with more than one bank, deposit insurance coverage limit is applied separately
to the deposits in each bank.
● Kinds of deposits insured: All deposit accounts including savings, fixed, current, recurring, except:
Deposits of the Foreign Governments Deposits of the Central and State Governments.
● Insurance cost is fetched by the bank which is insured. The DICGC charges 10 paise per Rs. 100 as
insurance premium.
Self help groups refer to group of 15-20 people (generally women) , who pool or collect their resources
like money so as to help each other in times of need. Self help groups give loans to its members at a
general interest rate which is less than interest rate of moneylenders.Self help groups are also able to
take loans from bank when they have pooled good amount of money. Also SHG act as building groups
of village and provide platform to discuss village issues.
Cooperative Banks
Banks in India can be broadly classified under two heads — commercial banks and co-operative banks.
While commercial banks (nationalised banks, State Bank group, private sector banks, foreign banks and
regional rural banks) account for an overwhelming share of the banking business, co-operative banks also
play an important role.
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The structure of cooperative network in India can be divided into 2 broad segments
● Urban Cooperative Banks
● Rural Cooperatives
Long-term structures
State Cooperative Agriculture and Rural Development Banks (SCARDS): Operate at state-level.
Primary Cooperative Agriculture and Rural Development Banks (PCARDBS): Operate at district/block
level.
Both are complimentary to each other in balancing growth, unemployment and inflation.
Fiscal policy is by the government relates to the revenue and expenditure policies of the government and
also it is the use of government funds to influence the economy, like the annual budget and taxation.
Monetary policy is administered by the central bank of the nation with regard to money supply, interest
rates etc.
Following are the instruments of Monetary Policy in India.
Cash Reserve Ratio (CRR) It is the share of net demand and time liabilities (deposits) that banks must
maintain as cash balance with the Reserve Bank.
Demand Liabilities
Current Deposits, Savings bank deposits, Margins held against letters of credit/guarantees, Balances in
overdue fixed deposits, Outstanding DDs, Unclaimed deposits, Credit balances in the Cash Credit account
and deposits held as security for advances which are payable on demand & Money at Call and Short Notice
from outside the Banking System (Liability to others).
Time Liabilities
Fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank
deposits, staff security deposits, margin held against letters of credit, if not payable on demand, & deposits
held as securities for advances which are not payable on demand and Gold deposits.
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Lower CRR means bank can give more money as loan--> lower interest rates--> cheap loan--> more people
take loan to start business or building house or buying car-->boost in economy. However, can also lead to
inflation, if people have more cash in their hands than the items available for purchase in the market.
Higher CRR: Bank can give less money as loan-->Higher interest rate-->it becomes expensive to start a
new factory, buy a new house / car/bike. This can curb inflation but may also lead to slowdown in economy
because people wait for the interest rates to go down before taking loans.
● With every cut in 25 basis points in CRR it would infuse the liquidity of Rs.16000 crore.
Statutory Liquidity Ratio (SLR): The share of net demand and time liabilities that banks must maintain in
safe and liquid assets, such as, government securities, cash and gold. Changes in SLR often influence the
availability of resources in the banking system for lending to the private sector.
Refinance facilities: Sector-specific refinance facilities aim at achieving sector specific objectives through
provision of liquidity at a cost linked to the policy repo rate.
Liquidity Adjustment Facility (LAF): Consists of overnight and term repo/reverse repo auctions. Reserve
Bank has increased the proportion of liquidity injected in the LAF through term-repos.
Term Repos: Reserve Bank introduced term repos of different tenors, such as, 7/14/28 days to inject
liquidity over a period that is longer than overnight.
Aim: To help develop interbank money market which in turn can set market based benchmarks for pricing
of loans and deposits and through that improve transmission of monetary policy.
Scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by
dipping into their SLR portfolio up to a limit (currently 2% of their NDTL) at a penal rate of interest
(currently 100 basis points above the repo rate).
This provides a safety valve against unanticipated liquidity shocks to the banking system. MSF rate and
reverse repo rate determine the corridor for the daily movement in short term money market interest rates.
Open Market Operations (OMOs): These include both, outright purchase/sale of government securities
for injection or absorption of liquidity
Bank Rate: Rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other
commercial papers. This rate has been aligned to the MSF rate and therefore changes automatically as and
when the MSF rate changes alongside policy repo rate changes.
Types of Accounts
Bank Accounts are classified into four different types. They are,
1) Current Account
2) Savings Account
3) Recurring Deposit Account
4) Fixed Deposit Account
1) Current account
● For business persons, firms, companies, public enterprises etc and are never used for the purpose
of investment or savings.
● These deposits are the most liquid deposits and there are no limits for number of transactions or
the amount of transactions in a day.
● No interest paid on amount held in the account, banks charges certain service charges, on such
accounts.
● Do not have any fixed maturity as these are on continuous basis accounts.
2) Savings Account
● For saving purposes
● Any individual either single or jointly can open a savings account. Most of the salaried persons,
pensioners and students use Savings Account.
● Advantage of having Savings Account is Banks pay interest for the savings. The saving account
holder is allowed to withdraw money from the account as and when required.
● Rate of interest ranges between 4% to 6% per annum in India.
● There is no restriction on the number and amount of deposits. But withdrawals are subjected to
certain restrictions. Some banks recommend to maintain a minimum amount to keep it functioning.
3) Recurring deposit account or RD account is opened by those who want to save certain amount of
money regularly for a certain period of time and earn a higher interest rate.
● A fixed amount is deposited every month for a specified period and the total amount is repaid with
interest at the end of the particular fixed period.
● Period of deposit is minimum six months and maximum ten years.
● Interest rates vary for different plans based on the amount one saves and the period of time and also
on banks.
● No withdrawals are allowed from the RD account. However, the bank may allow to close the
account before the maturity period.
● Can be opened in single or joint names. Banks are also providing the Nomination facility to the
RD account holders.
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● In case of need, the depositor can ask for closing the fixed deposit prematurely by paying a
penalty(usually of 1%, but some banks either charge less or no penalty) The penalty amount
varies with banks.
● A high interest rate is paid on fixed deposits. The rate of interest paid for fixed deposit vary
according to amount, period and also from bank to bank.
Miscellaneous Deposits
CASA Deposits
2. Re-investment deposits: Interest is compounded quarterly and paid on maturity, along with the
principal amount of the deposit. In the Flexi Deposits amount in savings deposit accounts beyond a
fixed limit is automatically converted into term-deposits.
3. Recurring deposits: Fixed amount is deposited at regular intervals for a fixed term and the
repayment of principal and accumulated interest is made at the end of the term. These deposits are
usually targeted at persons who are salaried or receive other regular income. A Recurring Deposit
can usually be opened for any period from 6 months to 120 months.
Plastic Money
Different types of plastic money available in the market today. Be it credit cards, debit cards,charge cards,
co-branded cards. More and more Indians are using them as a convenient mode of payment.
Debit Card: Money you are spending is your own and is drawn from an account you have with the
bank/institution issuing you the debit card. No money in that account? No spendy.
Credit Card: Money you are spending is the bank’s and at the end of each month the bank/institution
will issue you bill letting you know how much of their money you've spent, how much in total you owe
them and how much they require you to pay this month. There is of course usually a limit to how much
of the bank's money they will allow you to use, if you have used all of those funds - no spendy.
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Prepaid cards: A prepaid card works a bit like a gift card – you top it up with money, and you can only
spend up to that amount. Often used by travellers to carry holiday money, and by anyone without a
normal bank account – generally kids, teens and people with poor credit ratings.
Smart card: It contains an electronic chip which is used to store cash. This is most useful when you have to
pay for small purchases. For example bus fares and coffee. No identification, signature or payment
authorisation is required for using this card. The exact amount of purchase is deducted from the smart card
during payment and is collected by smart card reading machines. No change is given.
Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the
purpose of offering certain exclusive benefits to the consumer. For example, the Citi-Times card gives you
all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to
Times Music events, etc.
Loans
Home Loan: Home loan as name suggest is the loan against buying property. Every individual currently
have dreams to have their own home.
Personal Loan: It is the loan granted to fulfill your expenses which ranges from buying some expensive
electronic gadgets to booking your air tickets. People used to use this facility for anything they can. They
forget that usually rate of interest on such loans will be higher than other types of loans. But still to have
something in advance end up them to borrower of such type of loans. Here we may find two types of loans
● Secured Loans-Where you provide some collateral as a safety against loans.
● Unsecured Loans-In such type of loans borrower collateral not required.
Car Loan or Vehicle Loan: Used to meet your financial requirement when one is planning to have his
dream car or bike. It is usually a secured loan where collateral is your vehicle and in case of default lender
may recover it by taking back your vehicle. But some lenders offer unsecured loans where your credit score
matters more.
Education Loan: This is actually a handy tool for parents who not planned well for their kid’s higher
education.
Security
Upto Rs.4,00,000: Parents need to be joint borrowers but security is not required.
Above Rs.4,00,000 and below Rs.7,50,000: Besides parents joint borrower condition, you need to bring
collateral security in the form of suitable third party guarantee will be taken. But if banks satisfied with
financial condition of the borrower then they may waive the condition of third party collateral.
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Pledge is when the property is offered as collateral or security. It is a right to reserve a legal interest in
something. Example- a lot of banks and credit unions have what is called "cross collateral." So for instance,
if you have a vehicle loan with a bank and also have a checking account with the bank, there is an excellent
chance that you've signed a contract provision where you've "pledged" whatever funds you may have in your
checking account from time to time as additional security on the loan.
Hypothecation: It is used when you(borrower) have the actual possession of the asset, for which you have
taken the loan. Generally, this is charged against loans for movable assets, like car, bus, etc. (vehicle loans).
Here, the assets (bus, car, etc.) remain with you, and you are hypothecated to the bank for the loan granted.
In case you are unable to repay the loan amount, then the bank has the right to sell the asset (bus, car, etc.),
(which is possessed by you) and recover the total amount (with interest).
Mortgage: It is used when you (borrower) have the actual possession of the assets, for which you are
granted loan (e.g., house loan), or against which you are granted loan (e.g., house mortgaged). Mortgages
are generally those assets, which are permanently attached with Earth surface, like house, land, factory etc.
In case you are unable to repay the loan amount, the bank has the right to seize and sell the mortgage, and
recover the loan amount (with interest).
MICR
MICR stands for Magnetic Ink Character Recognition.
It is a technology which allows machines to read and process cheques enabling thousands of cheque
transactions in a short time.
MICR code is usually a nine digit code
First three digits: Represent the city code that is the city in which the bank branch is located. Next three
digits: Bank code
Last three digits: Bank branch code
e.g. For example, if you have an account with Axis Bank,New Delhi (Defence Colony) then its nine digit
MICR code will be 110211004 where:
110, the first three digits representing the city code for New Delhi;
211, the next three digits representing the bank code for Axis bank;
And 004, the last three digits representing the bank branch code for Defence Colony.
IFSC
IFSC(Indian Financial System Code)
The Payment Systems such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement
(RTGS) & Centralized Funds Management System (CFMS) used IFS Codes. IFSC developed by the
Reserve Bank of India.
The code consists of 11 Characters:
First 4 characters represent the entity
Fifth position has been defaulted with a 0 (Zero) for future use
Last 6 characters denotes the branch identity
e.g ICIC0000438
SWIFT Code
It is a unique identification code for both financial and non-financial institutions approved by the
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International Organization for Standardization (ISO). SWIFT Standards, a division of The Society for
Worldwide Interbank Financial Telecommunication (SWIFT), handles the registration of these codes.
SWIFT Codes are used when transferring money between banks, particularly for international wire transfers,
and also for the exchange of other messages between banks.
NEFT is a payment system facilitating one- Real Time: Instructions that are executed at
to-one funds transfer. the time they are received, rather than at some
later time.
Maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances and
remittances to Nepal
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But with UPI, you only need a smartphone with an app that has enabled UPI platform. Only one app for all
your accounts, be it be of any bank. You will be given a virtual ID and a mobile personal identification
number (MPIN) which are all required to do transactions using this new platform.
● Decrease profitability.
● Reduce capital assets and lending limits.
● Increase loan loss reserves.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI) empowers Banks to recover their non-performing assets without the intervention of the
Court.
3 alternatives
● Securitisation
● Asset Reconstruction
● Enforcement of Security without the intervention of the Court.
Applicable only for NPA loans with outstanding above Rs.1 lakh. NPA loan accounts where the amount is
less than 20% of the principal and interest are not eligible to be dealt with under this Act.
The Act empowers the Ban
● To issue demand notice to the defaulting borrower and guarantor, calling upon them to discharge
their dues in full within 60 days from the date of the notice.
● To give notice to any person who has acquired any of the secured assets from the borrower to
surrender the same to the Bank.
● To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.
● Any Security Interest created over Agricultural Land cannot be proceeded with.
If the borrower fails to comply with the notice, the Bank may take recourse to the following measures:
1.Take possession of the security
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Balance Sheet
The first chairman of Banks Board Bureau selected is Vinod Rai who is former CAG.
Demat account
Demat account is an account in which the shares and securities are held in dematerialized form i.e.
electronically without any physical papers held. To carry out transactions in the stock market, one should get
open a demat account. Multiple demat accounts can be opened. Demat accounts are held by a single person
i.e. no joint accounts can be operated.
ECS Credit: ECS Credit is for making bulk payment of amounts. Under this scheme, a single account is
debited and then multiple accounts are credited. Example: A company has 50 employees and at the start of
month it gives salary to all the employees so instead of crediting each account separately, the company can
use the ECS Credit Scheme.
ECS Debit: ECS Debit is for bulk collection of amounts. Under this scheme, multiple accounts are debited
and then a single account is credited. Example: Many people go for insurance policies and they have
allowed the payment of their premiums from their account. Now it is possible that on a single day, many
customer accounts are to be debited to have the premium from them. Here ECS Debit scheme can be used.
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calculation for arriving at respective base rates. This is the main reason for changing the policy to
Marginal Cost of Funds based Lending Rates (MCLR).
Marginal Cost of Funds: They are the funds which banks have to give to its customers and RBI instead of
investing them in other ways.
Para banking
Para banking activities are the activities carried out by the bank which are apart from its normal day-to-day
activities. Its not that bank can perform any activity other than daily activities, it can perform only those para
banking activities which are permitted by RBI.
Examples: insurance business, portfolio management services, to become pension fund managers, mutual
funds business, money market mutual funds, underwriting of bonds of PSUs, investment in venture capital
funds, etc.
Bancassurance
Bancassurance as the term suggests is Bank + Insurance. Bancassurance means selling insurance product
through banks. It is one of the para banking activity which the RBI has allowed the banks to take up. For
selling the insurance product, bank and insurance company come up in a partnership where the bank sells
the insurance company’s insurance products to its clients.
Some examples include:
SBI General Insurance Company Limited: joint venture between SBI and Insurance Australia Group (IAG).
SBI Life Insurance: joint venture life insurance company between SBI and BNP Paribas Cardiff of France.
E-Lobby
E-Lobby is a facility which is now provided by banks so that their customers can do their banking
transactions as per their convenience 24×7 i.e. without any time restriction. E-Lobby provides the facility on
bank holidays also.
Self service facilities which can be done at banking e-lobbies include: ATM withdrawals, cash deposits,
card-to-card transfers, mobile phone top-ups, railway booking, passbook printing, NEFT, opening of FD/RD
accounts, SMS alerts, cheque drop box, bill payments, mini statements, etc.
Debt Consolidation
In simple words Debt Consolidation is going for another loan to pay the existing loan.
Technical definition says that Debt Consolidation is a form of debt refinancing that entails taking out one
loan to pay off many others. Refinancing means replacement of an existing debt to be paid with another one.
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Money laundering
It is an act of converting illegal money to legal money. A person who is found having money from illegal
sources can be made to go to prison, or any other liable punishment. So the persons or rather criminals try to
convert their illegal money to legal money so that their money appears clean which is known as money
laundering.
• The act related is Prevention of Money laundering Act 2002.
• A step to prevent money laundering is KYC (Know Your Customer) policy. The KYC helps to
ensure that banks’ services are not misused.
Department of Posts
Indradhanush plan
Finance minister Arun Jaitley launched a seven pronged plan called Indradhanush in August 2015. The
mission is also known as A2G for public sector banks.
• Mission of the plan: To revamp or improve the functioning of public sector banks. Indradhanush
mainly focuses on systemic changes in state-run lenders, including a fresh look at hiring, a
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comprehensive plan to de-stress bloated lenders, capital infusion, accountability incentives with
higher rewards including stock options and cleaning up governance.
The plan is called Indradhanush because it contains seven elements as: Appointments, Bank Board Bureau,
Capitalization, De-stressing, Empowerment, Framework of Accountability and Governance Reforms.
For detailed banking notes follow the link: Banking and Finance
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● Explain briefly about CAD and what is the current economic situation of our country? Is CAD
increasing or decreasing now? And why?
● What is the impact of dollar outflow? Why there was ban on gold imports?
● Explain trade deficit.
● What is the benefit of lending?
● How many types of loans are there?
● Difference between Savings a/c and Savings student a/c?
● What is marginal utility?
● What is CRR and SLR?
● How will you deal with a rural person if he comes to bank to open an account without any
documents?
● What is nationalization of banks? What makes government to take up banks?
● What is the first quality that a banker should posses?
● What is the major problem that all the banks are facing?
● Difference between credit card and debit card?
● What is a negotiable instrument? How do you transfer a cheque to a payee?
● If you have to pass a cheque related to a customer's current account then what are the
observations you will make?
● What is MICR?
● Which act is used for reducing NPA?
● What is draft? What is cross cheque? What is the difference between cross cheque and Bearer
Cheque?
● If you are seated in counter then a customer comes and asks you what i have to do for opening
an account then you said to him bring that document this document he doesn't understand
you. Do you have patience to make understand him about the documents?
● What are RTGS and NEFT? Full form and differences.
● What is PIN? Can you disclose it to anybody?
● Do you use debit card? For what purposes? What we require to use debit card for payment?
● What is Indian Banking System?
● What is Banking Ombudsman and what is Single Window in bank?
● What is Cross Selling.
● Let's say that a new bank branch is about to come up then how will you inform people about it
and get customer?
● What are the qualities required in candidate as a PO?
● If one person came to you to break his fixed deposit because he needs some money what will
you do?
● What is lead banking?
● What is priority sector lending?
● What is the procedure for granting loan?
● Which technology is used in banking?
● Payment and small bank purpose
● Difference between savings account and current account.
● What are the KYC norms?
● What is demat account?
● What is Purchasing Power Parity?
● What is Narrow Banking and Payment gateways?
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● What is the need for payment banks if there are other banks?
● What is the benefit of high CASA for banks?
● What is Net interest margin?
● What are the benefits for a bank in defining risk categories?
● We want to start an ATM in rural place where not even a landline connection is there then
how will you provide ATM? Can u tell the antenna name using In this process?
● What is contingent liability?
● What is the use of marketing in banks?
● What are the differences between private banks and nationalised banks?
● What is mean by Cyber crime?
● Do you know which bank give highest interest on saving accounts and how much?
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