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Intermediate / 1 to 5 years experienced level questions & answers

Ques 1. What is the role of a bank teller?

A bank teller is responsible for handling customer transactions, such as deposits, withdrawals, and account inquiries, while providing excellent customer service.

Example:

Can you provide an example of a situation where you resolved a customer's issue efficiently?

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Ques 2. Explain the term 'liquidity' in banking.

Liquidity refers to a bank's ability to meet its short-term obligations by having sufficient cash reserves or assets that can be quickly converted into cash.

Example:

How does a bank ensure it maintains adequate liquidity levels?

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Ques 3. How do banks manage credit risk?

Banks manage credit risk by assessing borrowers' creditworthiness, setting lending limits, and implementing risk management practices such as collateral requirements and credit scoring.

Example:

Provide an example of a situation where you successfully mitigated credit risk in your previous role.

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Ques 4. Describe the concept of 'KYC' in banking. Why is it important?

KYC (Know Your Customer) is a process through which banks verify the identity of their customers. It is important for preventing fraud, money laundering, and ensuring compliance with regulatory requirements.

Example:

Share an example of how you implemented KYC procedures to detect and prevent fraudulent activities in your previous role.

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Ques 5. Explain the term 'net interest margin' (NIM) in banking.

Net interest margin is the difference between a bank's interest income and interest expenses, expressed as a percentage of its interest-earning assets. It measures the profitability of a bank's core lending and investment activities.

Example:

How can a bank improve its net interest margin, and why is it important for financial performance?

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Ques 6. Explain the concept of risk diversification in banking.

Risk diversification involves spreading investments or loans across different assets or sectors to reduce the impact of potential losses. In banking, it helps mitigate risks associated with concentrated exposures.

Example:

Can you provide an example of how you implemented risk diversification strategies in your previous role?

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Ques 7. What is the significance of the loan-to-deposit ratio for a bank?

The loan-to-deposit ratio measures the proportion of a bank's loans to its deposits. A higher ratio may indicate higher lending risk, while a lower ratio might suggest underutilized funds. It's crucial for assessing a bank's liquidity and lending practices.

Example:

How can a bank strike a balance in maintaining an optimal loan-to-deposit ratio?

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Ques 8. How does technology impact the banking industry, and what role does digital banking play?

Technology has transformed banking with innovations like online banking, mobile apps, and fintech collaborations. Digital banking enhances customer experience, improves efficiency, and facilitates financial inclusion.

Example:

Describe a successful implementation of a digital banking solution you were involved in and its impact.

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Ques 9. Discuss the role of a bank in promoting financial inclusion.

Banks play a crucial role in promoting financial inclusion by offering accessible and affordable financial services to individuals and businesses, especially those in underserved or rural areas.

Example:

Provide an example of a program or initiative you were involved in to promote financial inclusion in your community.

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Ques 10. What are the key factors influencing the profitability of a bank?

Factors influencing a bank's profitability include interest rates, loan quality, operating efficiency, and overall economic conditions. Balancing these factors is essential for sustained profitability.

Example:

Explain how changes in interest rates can impact a bank's profitability and how you would navigate such a scenario.

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Experienced / Expert level questions & answers

Ques 11. What is the difference between commercial banks and investment banks?

Commercial banks primarily deal with deposits and loans for individuals and businesses, while investment banks focus on capital markets, trading, and investment advisory services.

Example:

Can you provide an example of a service offered by an investment bank but not by a commercial bank?

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Ques 12. What are the key factors influencing interest rates in the banking industry?

Factors include inflation rates, economic conditions, central bank policies, and the overall demand and supply of money in the economy.

Example:

Explain how a central bank decision can impact interest rates.

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Ques 13. What is Basel III and how does it impact banks?

Basel III is an international regulatory framework for banks that aims to strengthen bank capital requirements and improve risk management. It impacts banks by setting higher capital requirements and introducing measures to address liquidity and leverage risks.

Example:

Can you explain how Basel III has influenced the risk management practices in banks?

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Ques 14. What is the purpose of stress testing in banking?

Stress testing assesses a bank's resilience by simulating adverse economic scenarios. Its purpose is to identify potential weaknesses in a bank's capital adequacy and risk management practices.

Example:

Can you provide an example of a stress testing scenario and how it might impact a bank's financial stability?

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Ques 15. What is the role of the Central Bank in a country's banking system?

The Central Bank oversees the monetary policy, regulates and supervises financial institutions, issues currency, and manages foreign exchange reserves. It plays a crucial role in maintaining economic stability and financial integrity.

Example:

Discuss a recent monetary policy decision made by the Central Bank and its potential impact on the banking sector.

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Ques 16. What are Non-Performing Loans (NPLs), and how do banks manage them?

NPLs are loans where borrowers have failed to meet repayment obligations. Banks manage them through proactive measures like restructuring, settlements, or collateral liquidation to minimize losses.

Example:

Share an experience where you successfully reduced the NPL ratio in your previous role.

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Ques 17. Discuss the importance of regulatory compliance in the banking sector.

Regulatory compliance ensures that banks adhere to laws and regulations, promoting financial stability and protecting consumers. Failure to comply can result in legal consequences and damage a bank's reputation.

Example:

How do you stay updated on changes in banking regulations, and how did you implement compliance measures in your previous role?

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Ques 18. Explain the concept of the time value of money and its relevance in banking.

The time value of money recognizes that a sum of money has different values at different points in time due to factors such as interest rates and inflation. In banking, it influences decision-making in areas like lending, investing, and risk assessment.

Example:

Provide an example of how you applied the time value of money in a financial analysis or decision-making process in your previous role.

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Ques 19. What is the role of a credit analyst in a bank, and how do they assess creditworthiness?

A credit analyst evaluates the creditworthiness of individuals or businesses applying for loans. They assess financial statements, credit history, and economic factors to determine the risk associated with lending.

Example:

Describe a challenging credit analysis you conducted and the factors you considered in your decision-making process.

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Ques 20. How does a bank manage operational risk, and why is it important?

Operational risk involves the potential for losses due to inadequate processes, systems, human error, or external events. Banks manage operational risk through robust internal controls, risk assessments, and contingency planning.

Example:

Share an example of how you contributed to enhancing operational risk management in your previous banking role.

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