Common Banking Interview Questions

There are a lot of people applying for jobs in public sector banks in India and the competitive examination is also tough to crack. State bank conducts separate examination to recruit staff and other banks recruit through a common exam known as IBPS.

Here are some of the commonly asked questions related to banking that helps you to prepare for the interview:

What is repo rate ?

Repo rate is the interest rate at which Reserve Bank of India (RBI) lends money to the commercial banks for a short term against securities. Suppose you are a small shop owner (commerical bank) who buys goods from a whole saler in debt keeping some thing valuable as collateral. In return, you have to pay a higher price mutually agreed between both of you later and take your collateral back. The profit the wholesaler takes from you can be called as repo rate.

Current repo rate is 8.5 percent.

Note: These values vary according to RBI policy.

What is reverse repo rate ?

Reverse repo rate is the rate at which commercial banks lend money to RBI

Suppose the whole-saler is in shortage of goods and you have stocks of extra goods and you are willing to sell the goods to the whole saler. The rate at which you give goods to the whole saler can be called as reverse repo rate.

Current reverse repo rate is 7.5 percent


What is bank rate ?

Bank rate is the interest charged by RBI on loans by commercial banks. Here collateral is not required.
The current rate is about 6.0 percent.


What is CRR ?

CRR is the ratio of funds banks have to keep with Reserve Bank as per norms. If CRR ratio is less banks will have more money to conduct business.

Current CRR is 6 percent

What is NEFT ?

There are two modes for transferring funds from one bank account to another account in India using electronic fund transfer.
They are National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS). In NEFT transactions are processed in batches and in RTGS the transaction is done immediately. So, RTGS is faster than NEFT.


Note: I am not an expert in banking domain. I collected these information when my sister was preparing for the IBPS P.O interview :-)