Frequently Asked Banking Interview Questions (With Sample Answers)

By Indeed Editorial Team

Updated 1 October 2022

Published 15 December 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Whether you are a fresher or an experienced professional, you have a better chance of getting a job offer if you have the right educational qualifications, aptitude and well-prepared answers for the in-depth skills assessment questions that the interviewers would ask you. By practicing your answers, you would be able to respond naturally and effectively during your banking interview.

In this article, we review some frequently asked banking interview questions and example answers to help you clear your interview and get the banking job you want.

Related: A Guide to Banking Operations (With Careers and Salaries)

General Banking Interview Questions

When you attend a banking interview, the interviewers may begin by asking you several general questions that may not necessarily be about the financial sector. The reason they would ask such unrelated general questions is to assess you as an individual and discover if you would be a reliable employee. Here are a few that you are likely to encounter:

  • Can you tell me about yourself in brief?

  • How did you find out about this job opening?

  • Why do you want to leave your current profession?

  • Why do you want to get into the banking sector?

  • What do you find appealing about a career in banking?

  • If we hire you, where do you see yourself in five years?

  • How do you deal with conflict in your professional life?

  • Have you ever worked under duress in a high-pressure situation? How did you handle it?

  • Did you ever require to make a difficult professional decision involving your co-workers in your previous job?

  • What was your finest achievement in your previous job, and why?

  • Would you describe yourself as a team player?

  • Do you have any hobbies outside of work?

  • What do you usually do in your leisure time?

  • If we hire you, what kind of salary would you expect?

  • Would you be willing to work in rural areas?

  • Is there anything that you have not included in your resume that you would like us to know about you?

Related: Interview Question: "Tell Me About Yourself"

Banking Experience Interview Questions

After assessing you as a person with the general questions, the hiring manager might ask questions about your interest in the banking sector and even your banking knowledge and experience. The purpose is to test your understanding of the requirements of the banking profession. Here are some sample questions you can expect:

  • Why do you want to work in our bank?

  • Are there any skills that can transfer over from your previous career to a banking career?

  • Do you enjoy interacting with customers and resolving their issues?

  • How would you rate yourself when it comes to sales skills?

  • Describe the types of commercial banks.

  • What is investment banking?

  • What is a consumer bank?

  • What are the different ways in which banks earn a profit?

  • Describe the types of accounts in a bank.

  • What documents does a person require to open a savings account?

  • What are the different ways in which bank customers can operate their accounts?

  • Explain a home equity loan.

  • What are non-performing assets in banking?

  • Who is the current governor of RBI?

  • Do you know the difference between nationalised banks and private banks?

Related: 9 Common Mistakes to Avoid in an Interview

In-Depth Banking Knowledge Interview Questions

Banking is a complicated field, and bank employees are required to have extensive financial knowledge to function capably and handle all the responsibilities that come with the job. The hiring manager would ask in-depth banking interview questions to test your understanding of banking requirements, such as:

  • Explain annual percentage rate and how to calculate it.

  • How do bank customers benefit from overdraft protection?

  • Give a few examples of banking software applications.

  • Explain amortisation and what leads to negative amortisation.

  • Explain the system of loan grading.

  • Explain line of credit.

  • Explain the difference between FDI and FII.

  • What are the benefits of a foreign draft?

  • How do you calculate the debt-to-income ratio?

  • Why do banks issue payroll cards?

  • In what ways is the new tax regime different from the old tax regime?

Related: How to Prepare and Practise for a Mock Interview

Banking Interview Questions With Sample Answers

To prepare well for a banking interview, it helps to create a list of frequently asked questions, research their answers and create your own compelling responses. You might want to practice the answers with family and friends until you can manage a natural, effortless delivery. You can also videotape yourself, assess your performance and work on improving your body language. Here are some practice questions with sample answers:

What are some of the recent, significant trends in the banking industry?

The rapid digitisation of the banking system has had a considerable impact on the growth of the Indian economy. As a banking professional, you are required to be aware of developing trends as these are likely to affect your future career and the services you offer. The hiring manager would ask this question to discover if you understand the importance of keeping up with changes, staying competitive and using new technologies to build better relationships with clients.

Example: "Some of the trends that have brought about significant shifts in the banking industry include digitisation, enhanced mobile banking, cloud banking, digital-only banks, fintech companies and biometric authentication. Other trends include the popularity of a real-time payment system like Unified Payments Interface to make inter-bank transactions using mobile devices and getting personalised banking solutions from AI chatbots. Additionally, there is the blockchain technology that may enable banks to achieve better regulatory compliance and also make lending more secure and fast. We have also seen the growth of smartwatch technology and wearable devices, which is likely to reshape the future of retail banking."

Related: Investment Banking Interview Questions and Answers

What are some of the challenges that the Indian banking sector faces currently?

As a developing economy, the Indian banking sector has to deal with various challenges that can affect their profitability and even their financial stability. By understanding the issues that they are up against, banking professionals would be in a better position to make informed decisions to avoid financial crises and help their banks stay financially healthy.

Example: "Non-performing assets, together with restructured assets, pose the greatest risk to the Indian banking sector in the current economic climate. These bad loans harm a bank's profitability. Another challenge is the decreasing ability of banks to raise money to shore up their capital. Over time, if the bank has too many bad loans and not have adequate capital, it could face major financial losses. This is increasingly becoming a problem for public sector banks in India."

Related: How To Prepare for an IBPS Exam in 4 Steps (With Tips)

Explain the meaning of the term LIBOR.

A banking professional is required to understand how global markets work to be able to offer sound financial advice to clients. By asking this question, the hiring manager wants to assess your knowledge and even your ability to explain things clearly. You can provide a brief explanation or go for a more in-depth one, depending on how much time you have in the banking interview.

Example: "Banks and other financial institutions in various countries, including India, have long used LIBOR (London Inter-bank Offered Rate) as a benchmark reference for determining the interest rates for short-term loans in the international interbank market. LIBOR acts as a crucial barometer to gauge the funding costs and investment returns of debt instruments, corporate loans, consumer loans, student loans, credit cards, mortgages, derivatives, government bonds and so on. It has eight maturities from overnight to 12 months and in five different currencies. It announces its interest rate once a day. Regulators want to phase it out by 2021 and replace it with SOFR (Secured Overnight Funding Rate)."

Related: What Is A Bank Internship? Eligibility Criteria And Duties

What is KYC policy?

All Indian banks are required to formulate a KYC policy with the approval of their respective boards as per RBI guidelines from 2004, and that is why banking professionals are required to be familiar with it. This question is quite common in banking interviews. You can explain the acronym and mention how a KYC process is necessary for many vital banking activities.

Example: "In banking, KYC stands for Know Your Customer, and it is a process initiated by a bank to determine the correct identity of its customers, their bank accounts, their business operations and their source of funds. To complete a KYC request, individual customers are required to furnish various documents such as a passport, PAN card, Voter's identity card, driving license, telephone bill, electricity bill or ration card for verifying their identity and address. There are different document requirements for companies, partnership firms, trusts and societies. The objective of KYC is to prevent money laundering schemes and activities."

Related: How To Get a Bank Job: A Complete Guide

Explore more articles