IBPS Interview Preparation Sheet

7/30/2019 IBPS Interview Preparation Sheet

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IBPS INTERVIEW PREPARATION Page 1

Many banks have already announced their recruitment program for Bank PO or IBPS PO based on the

IBPS Score Cards. For aspirants preparing for IBPS PO or Bank Exams, its a season ofinterviews &

Group Discussions (in a few banks). In this post we are providing a few more interview questions and

methods of answering them. Links for all our interview preparation posts related to Bank PO & Bank

Exams are again provided for your convenience . If you go through all these posts and prepare in the

manner as told by our experts, you may be able to perform much better in your interviews.

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Today we will discuss few more likely questions and methods of answering them.

Question 1: You are an Engineering graduate (or any other different field such as MBA, BCA, MCA etc.),

why you want to enter into banking sector?

Answer: This is a quite common question as you may be from a different field and now appearing in

Bank Exams Interviews, in such scenario this kind of question is very much likely. You can reply it a deft

manner by saying that although you are from a different field but you have always regarded career of aBank Officer as a very prestigious one & if given a chance you would like to enter in to banking sector.

Moreover you may be from a different field but you can still apply the knowledge you have acquired

(give some example, for e.g. Banks are now a days very much techno savy hence the knowledge you

have acquired in engineering, MCA etc can easily be applied). You can also say that banking is one of the

fastest growing sectors hence you too would like to be part of that growth and would like to take your

career to new levels by joining as a Bank Probationary Officer.

Question 2: By going through your bio data we observe that you have completed your graduation 3-4

years back, what you have been doing for last 4 years (or as the case may be)?

Answer: You can reply by telling the board about factual position, for e.g. if you have worked

somewhere you can tell them about that, if you have worked somewhere but you are not having proof

of that than you can say that you have tried your hand in a few jobs but they were not of your liking

hence after some time you have decided for preparation ofBank Exams. You can tell them that you

have been preparing for bank exams for last few years (as the case may be) and are determined to get

success and to become a Probationary Officer.

So these are our suggestions for these types of questions, you can now prepare your structured answer

as per your bio data. Your answers should be concise and to the point. You can always have different

answers for the same question but based on our experience we have suggested you how such questions

should be answered. Please go through all the posts given below and prepare step wise steps.

Good preparation for interview is a must for all aspirants, appearing in these PO Interviews or for

upcoming Bank Exams Interviews. Now we are going to provide you mock test series for IBPS PO

Interviews. Based on questions of previous Bank Exams Interviews and experiences of successful


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candidates, we are providing information on how to answer some of the most common questions for

Bank Exams Interview.

Question: Tell us something about yourself?

How to Answer: You should start with your personal details like your name and the place where you

belong, than you should give a brief about your family, mainly about your parents. You should continue

with your answer telling about your qualifications mainly about graduation and professional

qualification. If you have worked earlier with any other organization, you should also tell the board

about that. You should keep your answer to a maximum of 2-3 minutes.

You should try to cover four topics: early years, education, family, and recent career experience. Since

normally this question is among the opening questions of the interview hence if you can start well than

you will not only gain the confidence but also create a good opening impression on the board. You may

ask us how to answer other questions which are coming to your mind by posting your here.

Question: Why you want to enter in to banking sector?

How to Answer: You can tell the board that Banking Sector is growing at a rapid pace and provides huge

opportunities for learning as well as for career growth. The job of a Bank PO not only gives us

recognition in the society it also provides us opportunities for learning, as banking is a vast industry and

those willing to learn have a lot of scope for that.

You can also say that it was your dream from the very beginning to become a Bank Officer hence you

have chosen banking as your career. You can also say that you feel that with the knowledge and

aptitude you are having, you can contribute well in this sector hence you have chosen banking as your

career.

Question: You have got a good IBPS Score, what will happen if you get selection in another bank? Will

you leave our job in case get selection in other bank or somewhere else?

How to Answer: This is also a very common question but can be answered smartly; you can tell the

board that there is no point of leaving the job if you get selection in any other public sector bank as all

banks are almost same as far as career growth & job profile are concerned. You can also tell the board

that you are looking for an established career and willing to learn. You will not leave the job for small

monetary benefits & for petty reasons. You should try to These are indicative answers; the purpose here

is to tell you how you can answer these types of questions in an effective manner. You can always make

value additions as per the requirement & situation of the interview.

Important thing is clarity of thoughts and correct reply. Even if you are not aware of answers of a few

questions, it is not going to make any difference.

So, you should prepare for your interviews in the medium in which you are strong. Even a mix of Hindi &

English also works. So start your preparation and it would be wise to prepare structured answers of few


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of the common questions. Let me tell you normally more than 50% questions which are quite common

in nature can be well prepared in advance with structured answers.

Practice the reply of some of the questions given below in front of mirror or among your family &

friends which can give you a feel of real interviews.

What are your strong & weak points?

Give an example of a situation you found yourself in and what did you do?

How will you handle the situation if an experienced and old employee misbehaves with you in office?

What are your hobbies?

Why did you leave your previous job?

Where do you see yourself five years down the line?

How many marks will you give yourself out of 10 for this interview?

Why should we hire you into our organization?

Do you support privatization of banks and why?

Who is governor of RBI?

What is CRR?

What was the name of first bank established in India?

What are the tools with RBI to control liquidity in market?

What is the difference between Savings account and Current account?

What significant trends do you see in the future of the bank industry?

Here is another set of bank terminology for the various bank interviews and exams. SLR Rate,Bank rate, Inflation, Deflation are prpoerly explained in this column.

1. What is SLR Rate?

Every bank needs to maintain a certain amount of funds ( cash, gold, government approved

securities) before they can legally give loans or credits to its customers.This is called statutoryliquidity ratio.


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This rate is fixed by the reserve bank of India to control the expansion of loans.You may want to

know how the reserve bank determines the SLR rate.Actually SLR is determined as the % of

total demand and time liabilities.

Time liabilities

These are the liabilities that the banks are supposed to pay the customers any time whenever theyask.

SLR is also a monetary regulation tool used by the reserve bank for controlling the monetarysystem in the country effectively.

2. What is Bank Rate?

Bank rate is also called as the discount rate.It is in fact the interest rate charged by the central

bank when giving loans to the commercial banks.Remember that it is different from the Reporate. This rate is also an effective monetary regulation tool used by the reserve bank of India.

3. What is Inflation?

This is one common term which is can be seen in the newspapers on every day basis.It is the increase in the prices of goods and services in the economy.When the normal prices of

goods increases, generally the economy can be said to be inflating. Actually this happens when

there is more demand and less supply. In such a case the existing goods will be rated high andthe general prices of such goods increases.

4. What is Deflation?

This is just the opposite of inflation. Here the prices of goods ad services comes downcontinuously.Here you can also infer that there will be more supply and less buyers. Hence thegeneral value of the goods gets reduced and even the goods will be sold below their market rates.

1. What is a Repo Rate?

Repo rate at which normal banks borrow money from the reserve bank of India. All the banks in

India have the provision to borrow money from the RBI if ever any type of necessitycomes.Reserve bank uses this rate as a means of controlling the monetary value.If the Repo rate

is decreased it means that banks can now borrow money from the reserve bank at lesser

percentage. Hence more banks will borrow money. Similarly if the Repo rate increases the

normal banks will not borrow money from reserve bank easily.

2. What is Reverse Repo Rate?

Reverse Repo rate is the opposite of Repo rate. In fact in this case reserve bank borrows money

from the normal banks.You may think does reserve bank need money? Reserve bank borrowingmoney from the banks is to ensure that the balance of money is maintained in the country. If

suppose there is more money floating around the banking industry, reserve banks increases the


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Reverse Repo rate. So what happens is more banks will be happy to lend money to reserve

bank.In this situation, banks earn good money from the reserve bank and RBI maintained the

financial situation.

3. What is CRR Rate?

Cash reserve ratio is the fixed amount of money the banks are supposed to keep with the reserve

bank of India.This money value is decided by the Reserve bank considering the situation. If

suppose reserve bank feels that there is too much money with the banks, Reserve bank canincrease the CRR rate making the banks to deposit more money with the RBI.So CRR is also a

means of monetary regulation tool of the Reserve bank of India.

So if you have any doubts regarding these 3 terms post your comments below.Make sure that

you understand these 3 basic terms first.This is the foundation of banking knowledge.

Repo Rate: It is the rate at which RBI lends money to all banks and for a short term period. Thecurrent Repo rate is 8%. When this rate is increased the loans become costlier.Reverse Repo Rate: It is the rate at which banks lend money to RBI in exchange of security or

bonds. The current Reverse Repo rate is 7%.

CRR: Cash reserve ratio is the ratio which banks has to keep with RBI in the form of cash

deposits. When RBI increases CRR that means that RBI want to drain out excess money from

the banks. This ratio is to maintain the flow of money in the market. Current CRR is 4.50%.

SLR: Statutory Liquidity Ratio means the ratio which banks has to maintain in the form of assets

like Gold, cash or bonds etc. Current SLR is 23%.

Bank Rate: Bank rate is the rate at which RBI lends money to all banks. Current Bank rate is

9%.

Base Rate: Base rate is the rate which is fixed by RBI and below which no banks are allowed topass the loan.

Accounts are of 4 types:

Saving A/c

Current A/c

Fixed Deposits andRecurring Deposits

Saving A/c: Saving a/c are opened by retail customers or individuals on which depositing a

certain amount they get fixed rate of interest that is 4%. The banks fix a certain amount for theaccounts to be maintained by the customers beyond which they are charged for non-maintenance

of the account.


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Current A/c: current A/c is the a/c opened by the companys or corporate customers on which

they didnt get any interest as transactions has to be done on daily basis in these accounts.

Fixed Deposits: FDs are the deposits the interest of which is paid after maturity. This maturityperiod can be from 7 days to the years decided by the depositor. Interest is paid higher than SB

accounts in FDs and RDs.

Recurring Deposits: RDs are the time deposits in which the a certain fixed amount is paid at

certain intervals of time for the time period being mentioned by the depositors.

RTGS: RTGS is a process of transaction of money from one account to the another in "Real

time" and on "Gross" settlement basis. This is the fastest way of transferring money or the swift

delivery process. In this process the transaction takes place on gross basis that is one-to-oneprocess. The timing of transactions in this process is from 0900hrs to 1900hrs on weekdays and

from 0900hrs to 1300hrs on Saturdays. The transactions between these timings under this

process are continuous and instant. Minimum transaction limit is from 2lacs rupees.

NEFT: National Electronic fund transfer system is another process of transaction in whichmoney is transferred through net banking. The transactions in this process are done in batches

which takes time. That is if you have to do transaction on the same day then you have process theamount in the morning hours then only it shall be processed the same day. This transaction takes

place 11times in a day that is from 0900hrs to 1900hrs in weekdays and from 0900 to 1330hrs on

Saturdays. Through NEFT there is no limit of transaction. But all banks charge some amount pertransaction both for RTGS and NEFT and its different for different banks.

Net interest margin: It is basically the income earned by banks by differentiating between theinterests they are earning from loans and interest they are paying to their depositors.

Marginal Standing Facility: It is the facility under which banks take loans from Central Bank at9%.

How does Credit card works ? Visa & Mastercard role ?? How does it help to bank ?

3 panelists were there. 2 sirs and 1 mam. All were very much polite and friendly in nature. Twolists of 30 candidates each was made. One was named as Agra1 and the other was Agra2. Her

Interview was taken by Agra1 panel. The whole interview process was in Hindi:

Int.1(The Lady): Please give us your brief introduction.

Ans: She introduced her name her education which she was pursuing about her family members.

Then her previous experience and present working and then her hobbies and strengths andweaknesses.Int.1: You came to give interview to us, how much you know about our bank?

Ans: She gave all the information which she knew like Syndicate banks establishment, its

chairman, its policies, its global credit card.Int.2.: Do you have an account in which bank?

Ans: Yes, then the bank name.

Int2: What facilities does it provide? Does it provided you the ATM? What facilities you can


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avail through ATM?

Ans: She said Cash withdrawal, cash deposit also. Then he cross questioned : Does your bank

provide you cash deposit facility through ATM? She said she never used it but it is. Then shesaid her bank is CBS branch.

Int2: What is CBS?

Ans: She answered all about CBS.Int3: Do you use internet? What is Modem?Ans: Yes, Modem is a device to access internet.

Int3: Its ok that its is used to access internet but how do it do this?

Ans: Then she remembered her physics notes of modulation and demodulation and answered.Int3: What is RTGS? What is the minimum limit of transaction through it?

Ans. She answered.

Int3: What are the requirement to do transactions through RTGS?

Ans: She answeredInt3: IFSC full form? And How many digits code is it?

Ans: She Told.

Int3: What is the Other way of Transaction apart from RTGS?Ans: She answered about NEFT.

Int3: What is full form of NEFT?

Ans: She answered.

Int1: Name any two Car manufacturing companies.Ans: Answered

Int1: Who is the Prime Minister of our Country? Where he lives?

Ans: She answered.Int1: What is Subsidy?

Ans: A bit confused on this.

Int1: How our PM was elected as Prime Minister, Is it through Election or generally?

Ans: She don't know this answer then they made her understand that he was elected directlywithout any elections.

Here is the utimate list of banking related IBPS bank interview questions.If you prepare thesequestions you can be assured that you will have sound knowledge in banking.

1. What is meant by Repo Rate?

2. What is meant by Reverse Repo Rate?

3. What do you mean by CRR Rate?4. What is meant by SLR Rate?

5. What do you mean by Bank Rate?

6. What is meant by Inflation?

7. What is meant by Deflation?8. What is meant by Deposit Rate?

9. What is meant by FII?

10. What do you mean by FDI?

11. What is meant by IPO?12. What is meant by Disinvestment?

13. What do you mean by Fiscal Deficit?


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14. What is meant by Revenue deficit?

15. What do you mean by GDP?

16. What is meant by GNP?17. What is meant by National Income?

18. What do you mean by Per Capita Income?

19. What is meant by Vote on Account?20. Explain the Differences between a Vote on Account and an Interim Budget?21. What is meant by SDR?

22. What is meant by SEZ?

23. What is meant by Open Market operations (OMO)?24. What is meant by Micro Credit?

25. What do you mean by KYC?

26. What is cash profit?

27. What is meant by Liquidity Adjustment Facility (LAF)?28. What is meant by RTGS System?

29. What is meant by Bancassurance?

30. What is meant by Wholesale Price Index (WPI)?31. What is meant by Consumer price Index (CPI)?

32. What is meant by Venture Capital?

33. What do you mean by Treasury Bills?

34. What is meant by Banking Ombudsmen Scheme?35. What do you mean by Subsidy?

36. What is meant by Debenture?

37. What are the types of debentures?38. What do you mean by hedge fund?

39. What is meant by FCCB?

40. What is meant by Capital Account Convertibility (CAC)?

41. What is meant by Current Account Convertibility?42. What is meant by Arbitrage?

43. What do you mean by Capitalism?

44. What is meant by Socialism?45. Explain prepayment and default risk

46. What are your techniques to estimate your teams performance?

47. What is transaction and core banking?48. What is the importance of NRI banking?

49. What is meant by ULIP?

50. Forex? Have you heard about it?What is it?

So its time for you to jot down the answers in your notebook

Here are some of the basic interview questions asked in the IBPS PO interviews 2012.The

questions of basic nature has been selected so that you can start your preparation finding answers

to the easy ones.

1. Where are you from?

2. What can you tell us about your home town?


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3. Tell me about your family

4. If you get the job will you be ready to work anywhere in India?

5. Do you think your parents will allow you to work anywhere across India?6. What is your ambition in life?

7. The why are you applying for the post of clerk?

8. Did you prepare for the interview?9. What all questions did you prepare?10. What are your strengths and weaknesses?

11. Dont you think you are over qualified for this simple job?

12. Why not software after engineering?13. Do you have any bank account?

14. Where and why?

15. What type of bank account do you have?

16. What are the types of bank accounts?17. What all details you need to fill up while withdrawing cash from the bank?

18. What do you mean by International Trade?

19. What is Balance of Payment?20. Why do you want to work in this bank?

21. Have you applied for any other banks?

22. What do you know about this bank?

23. Have you gone through our website?24. What is missing in the design of our website compared to the website of other banks?

25. Have you attended any bank interviews before?

26. What can you say about the recent regime change in uttar pradesh27. What are the states where elections are going on

28. What are the main differences you see in a private bank and public bank?

29. Have you heard about Basel 2?

30. What is the importance of Basel 2 in the present banking environment?

IBPS GD/PI

As many of the Banks has completed first phase of recruitment and are in second phase of selecting the

right candidate.

Most banks are going through the GD/PI of the shortlisted candidates. Here they check the confidence

level, their presentation & communication skills, banks also check the way in which the candidate

express his views to others.

This is done in the second round of recruitment i.e. Group Disussion.

Group Discussion (GD) is and activity, wherein 8-12 people form a group, and are given a topic to

discuss/situation to analyze and reason. Normal duration of a GD ranges between 15-20 minutes.

Usually, the participants are given a preparation time of 2-5 minutes but there are also instances when

one will be required to speak without preparation.


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There are certain things which the candidates should keep in mind while attending the GD round. As,

group Discussions are typically used for Personality Assessment Stage, which is an important stage for

selection in Bank jobs. Some of these we tried to state below:

Dos of Group Discussions:

Utilize the time effectively to understand the overall meaning of the topic- Have an open mind. This will

help you to bring in those points that are not likely to be raised by others.

Organize and structure your thoughts before speaking- i.e. Opening the GD or while summarizing it.

Maintain eye contact with the group in general and with the individual when he/she is speaking

Address the group in general; avoid over-communicating with or referring to specific individuals.

Use short sentences to convey the essence of your points- i.e. speak with depth.

Manage the way you look, speak and conduct- Etiquettes.

Control your weaknesses- e.g. difficult vocabulary, speaking about points that you cannot substantiate

or defend.

Use the right (rare) moments when the more vocal members pause to bring in your point.

Use we or the group or most ofus/all of us/some of us remember its a group discussion and you

are part of the group.

Donts of Group Discussions:

Do not just think from one angle of thought and bring only obvious facts or ideas to the discussion.

Do not speak your thoughts in disjoint phrases. Avoid stutters and stammers.

Do not look at your notes while speaking or when others are speaking. Stay involved even when you are

not speaking.

Avoid having dialogues or conversation with specific individuals within the group.

Do not use long-winding sentences to convey your points.

Do not be aggressive or use negative tone of speech.

Do not lose control or become nervous.

Do not moderate/ cut others in between unnecessarily.

Avoid using I or he/she, they


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Avoid citing examples of points raised by others or repeat your own points- remember time is limited

quantity does not fetch extra points.

Do not bring in new points in the summary or conclusion.

Avoid aggressive body language make sure you do not occupy the space of other participants and also

while making hand movements avoid having pen or pencil in the hand that point to others.

Read well about below stated topics before attending IBPS GD round andprepare well as these can also

be asked in PI round.

List of important Group discussion (GD) topics which may be a part ofyour IBPS GDs:

1) Womens reservation bill.

2) India economic development is not reaching to the people who need it most.

3) Food inflation is the result of Indian Government mismanagement and apathy.

4) Removing CBSE X exams is a bad move. Discuss

5) India will become superpower in near future

6) Foreign direct investment will revitalize the education system.

7) Is disinvestment in profit making PSUs advisable?

8) IPL is good for business but bad for cricket?

9) Is the Consumer really the King in India?

10) Should the public sector especially Delhi Jal Board be privatized?

11) Privatization will lead to Less Corruption

12) Media has become a tool of propaganda for the rich and the powerful

13) Education and medicine are no longer noble professions, they have become commercial.

14) Voting should be made compulsory.

15) Recession is the mother of innovation.

16) Breaking down larger Indian states into smaller will lead to better governance and development.

17) How to deal with high oil prices?

18) Lokpal Bill should be implemented or not?

19) Does moral policing preserve the culture?


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20) Caste based reservation- A boon or a bane?

21) We should conserve and preserve our rich monuments.

Indian Banking History

Banking in India originated in the last decades first banks were The General Bank of India, which started

in 1786, andBank of Hindustan, which started in 1770; both are now defunct. The oldest bank in

existence in India is theState Bank of India, which originated in theBank of Calcuttain June 1806, which

almost immediately became theBank of Bengal. This was one of the three presidency banks, the other

two being theBank of Bombayand theBank of Madras, all three of which were established under

charters from the British East India Company. For many years the Presidency banks acted as quasi-

central banks, as did their successors.

1. History :Merchants inCalcuttaestablished the Union Bank in 1839, but it failed in 1840 as a consequence of the

economic crisis of 1848-49. TheAllahabad Bank, established in 1865 and still functioning today, is the

oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires

shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to

The three banks merged in 1921 toform the HistoryImperial Bank of

India, which, upon India's

independence, became theState Bank

of Indiain 1955.

Contents

1 History 2 Post-Independence 3 Nationalisation 4 Liberalisation 5 Adoption of banking

technology
http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Banking_in_India#Historyhttp://en.wikipedia.org/wiki/Banking_in_India#Historyhttp://en.wikipedia.org/wiki/Banking_in_India#Post-Independencehttp://en.wikipedia.org/wiki/Banking_in_India#Post-Independencehttp://en.wikipedia.org/wiki/Banking_in_India#Nationalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Nationalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Liberalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Liberalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Adoption_of_banking_technologyhttp://en.wikipedia.org/wiki/Banking_in_India#Liberalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Nationalisationhttp://en.wikipedia.org/wiki/Banking_in_India#Post-Independencehttp://en.wikipedia.org/wiki/Banking_in_India#Historyhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1


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the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed,

with some of its assets and liabilities being transferred to theAlliance Bank of Simla.

Foreign banks too started to app, particularly inCalcutta, in the 1860s. TheComptoir d'Escompte de

Parisopened a branch in Calcutta in 1860, and another inBombayin 1862; branches inMadrasand

Pondicherry, then a French colony, followed.HSBCestablished itself inBengalin 1869. Calcutta was themost active trading port in India, mainly due to the trade of theBritish Empire, and so became a banking

center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in

Faizabad. It failed in 1958. The next was thePunjab National Bank, established inLahorein 1895, which

has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of

stability. Around five decades had elapsed since theIndian Mutiny, and the social, industrial and other

infrastructure had improved. Indians had established small banks, most of which served particular

ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks and a

number of Indianjoint stockbanks. All these banks operated in different segments of the economy. The

exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint

stock banks were generally under capitalized and lacked the experience and maturity to compete with

the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of

banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid

wooden bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by theSwadeshimovement. The Swadeshi movement inspired local businessmen and political figures to found banks of

and for the Indian community. A number of banks established then have survived to the present such as

Bank of India,Corporation Bank,Indian Bank,Bank of Baroda,Canara BankandCentral Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks inDakshina Kannadaand

Udupi districtwhich were unified earlier and known by the name South Canara ( South Kanara ) district.

Four nationalised banks started in this district and also a leading private sector bank. Hence undivided

Dakshina Kannada district is known as "Cradle of Indian Banking".

During theFirst World War(19141918) through the end of theSecond World War(19391945), and

two years thereafter until theindependenceof India were challenging for Indian banking. The years ofthe First World War were turbulent, and it took its toll with banks simply collapsing despite theIndian

economygaining indirect boost due to war-related economic activities. At least 94 banks in India failed

between 1913 and 1918 as indicated in the following table:

Post-Independence
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Thepartition of Indiain 1947 adversely impacted the economies ofPunjabandWest Bengal, paralyzing

banking activities for months. India'sindependencemarked the end of a regime of theLaissez-fairefor

the Indian banking. TheGovernment of Indiainitiated measures to play an active role in the economic

life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a

mixed economy. This resulted into greater involvement of the state in different segments of the

economy including banking and finance. The major steps to regulate banking included:

TheReserve Bank of India, India's central banking authority, was established in April 1935, butwas nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to

Public Ownership) Act, 1948 (RBI, 2005b).[1]

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India(RBI) "to regulate, control, and inspect the banks in India".

The Banking Regulation Act also provided that no new bank or branch of an existing bank couldbe opened without a license from the RBI, and no two banks could have common directors.

Banks Nationalisation in India:

Despite the provisions, control and regulations ofReserve Bank of India, banks in India except theState

Bank of Indiaor SBI, continued to be owned and operated by private persons. By the 1960s, the Indian

banking industry had become an important tool to facilitate the development of theIndian economy. At

the same time, it had emerged as a large employer, and a debate had ensued about the nationalization

of the banking industry.Indira Gandhi, thenPrime Minister of India, expressed the intention of the

Government of Indiain the annual conference of the All India Congress Meeting in a paper entitled

"Stray thoughts on Bank Nationalisation."[2]The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking

Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) andnationalisedthe 14 largest

commercial banks with effect from the midnight of July 19, 1969. These banks contained 85 percent of

bank deposits in the country.[2]Jayaprakash Narayan, a national leader of India, described the step as a

"masterstroke of political sagacity."Within two weeks of the issue of the ordinance, theParliament

passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the

presidentialapproval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for

the nationalization was to give the government more control of credit delivery. With the second dose of

nationalization, the Government of India controlled around 91% of the banking business of India. Lateron, in the year 1993, the government mergedNew Bank of IndiawithPunjab National Bank. It was the

only merger between nationalized banks and resulted in the reduction of the number of nationalised

banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%,

closer to the average growth rate of the Indian economy.

Liberalisation
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In the early 1990s, the thenNarasimha Raogovernment embarked on a policy ofliberalization, licensing

a small number of private banks. These came to be known as New Generation tech-savvy banks, and

included Global Trust Bank (the first of such new generation banks to be set up), which later

amalgamated with Oriental Bank of Commerce,UTI Bank(since renamedAxis Bank),ICICI Bankand

HDFC Bank. This move, along with the rapid growth in theeconomy of India, revitalized the banking

sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks,

namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the norms for

Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could

exceed the present cap of 10%,at present it has gone up to 74% with some restrictions.

The new policy shook the Banking sector inIndiacompletely. Bankers, till this time, were used to the 4-

6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern

outlook and tech-savvy methods of working for traditional banks.All this led to the retail boom in India.

People not just demanded more from their banks but also received more.

Currently (2010), banking in India is generally fairly mature in terms of supply, product range and reach-

even though reach in rural India still remains a challenge for the private sector and foreign banks. In

terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and

transparent balance sheets relative to other banks in comparable economies in its region. The Reserve

Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of

the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has

mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its

services sector-the demand for banking services, especiallyretail banking, mortgages and investmentservices are expected to be strong. One may also expect M&As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India allowedWarburg Pincusto increase its stake inKotak

Mahindra Bank(a private sector bank) to 10%. This is the first time an investor has been allowed to hold

more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding

5% in the private sector banks would need to be vetted by them.

In recent years critics have charged that the non-government owned banks are too aggressive in their

loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports

that the banks' loan recovery efforts have driven defaulting borrowers to suicide.[3][4][5]

Adoption of banking technology

The IT revolution had a great impact in the Indian banking system. The use of computers had led to

introduction of online banking in India. The use of the modern innovation and computerisation of the

banking sector of India has increased many fold after the economic liberalisation of 1991 as the

country's banking sector has been exposed to the world's market. The Indian banks were finding it
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difficult to compete with the international banks in terms of the customer service without the use of the

information technology

The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984)[6]whose chairman

was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this

committee was introducing MICR[7]

Technology in all the banks in the metropolis in India.This provideduse of standardized cheque forms and encoders.

In 1988, the RBI set up Committee on Computerisation in Banks (1988)[8]headed by Dr. C.R. Rangarajan

which emphasized that settlement operation must be computerized in the clearing houses of RBI in

Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further stated that there should be

National Clearing of inter-city cheques at Kolkata,Mumbai,Delhi,Chennai and MICR should be made

Operational.It also focused on computerisation of branches and increasing connectivity among branches

through computers.It also suggested modalities for implementing on-line banking.The committee

submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA

and bank employees' association.[9]

In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and SecuritiesSettlement in the Banking Industry (1994)[10]was set up with chairman Shri WS Saraf, Executive Director,

Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the BANKNET

communications network as its carrier. It also said that MICR clearing should be set up in all branches of

all banks with more than 100 branches.

Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments

(1995)[11]emphasized on EFT system. Electronic banking refers to DOING BANKING by using technologies

like computers, internet and networking, MICR, EFT so as to increase efficiency, quick service,

productivity and transparency in the transaction.

Apart from the above mentioned innovations the banks have been selling the third party products likeMutual Funds, insurances to its clients.Total numbers of ATMs installed in India by various banks as on

end March 2005 is 17,642. The New Private Sector Banks in India is having the largest numbers of ATMs

which is fol off site ATM is highest for the SBI and its subsidiaries and then it is followed by New Private

Banks, Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks of India.

Technological Developments in Indian Banking Sector

ABSTRACT:

Banking sector plays a significant role in development of Indian economy. So banks need to optionally

leverage technology to increase penetration, improve their productivity and efficiency, deliver cost-

effective products and services, provide faster, efficient and convenient customer service and thereby,

contribute to the overall growth and development of the country. Technology enables increased

penetration of the banking system, increases cost effectiveness and makes small value transactions

viable. Besides making banking products and services affordable and accessible, its simultaneously

ensures viability and profitability of providers. Technology allows transactions to take place faster and

offers unparallel convenience through various delivery channels. Technology enhances choices, creates
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new markets, and improves productivity and efficiency. Effective use of technology has a multiplier

effect on growth and development.

In the area of payment systems, there have been significant advancements of technology on the

customer transactions. India is one of the country that has effectively tackled huge volumes of paper

instruments in cost effective manner. The Magnetic Ink Character Recognition (MICR) cheque clearingSystem, cheque transaction system(CTS) is another innovative solution that has been developed to

enhance the efficiency of paper-based clearing system. CTS has eliminated the need for physical

movements of cheques. The National Electronic Clearing System (NECS), with its centralized processing

capability coupled with the implementation of CBS has brought down the clearing and settlement cycle.

Electronic Fund Transfer(EFT)/ National EFT (NEFT) is another illustration, where better process re-

engineering coupled with CBS and strict adherence to NEFT procedural guidelines has made this product

offer fund transfer service on a real time basis to customer. RTGS for real time gross settlement.

Keyboards: Technology, Effective, MICR, EFT, RTGS,

Technological Development in Banks:

Developments in the field of information technology (IT) strongly supports the growth and inclusiveness

of the banking sector by facilitating inclusive economic growth .IT improves the front end operations

with back end and helps in bringing down the transaction costs for the customers.

Important Events in India

Arrival of card-based payments- Debit, Credit card late 1980s and 1990s

Introduction of Electronic Clearing Services (ECS) in late 1990s

Introduction of Electronic Fund Transfer (EFT) in early 2000s

Introduction of RTGS in March 2004

Introduction of National Electronic Fund Transfer (NEFT) as a replacement to Electronic Fund

Transfer/Special Electronic Fund Transfer in 2005/2006

CTS in 2007

Computerization in Banks:

Technology has charged the face of the Indian banking sector through computation while new privatesector banks and foreign banks have an edge in this regard. Among the total number of public sector

bank branches, 97.8 percent are fully computerized at end March 2010 whereas all branches of SBI are

fully computerized.

Table 1: Computerization in Public Sector banks:


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Category 2007 2008 2009 2010

Fully computerized Branches (%) 85.6 93.7 95.0 97.8

Source: RBI, Annual Report 2009-10

Automated clearing House (ACH):

In clearing house, computers are employed to handle cheques. The nature of work involved in clearing

operations in voluminous, repetitive, routine in nature. It is complex to clear, exchange and settle the

transactions among several banks. Computers are deployed in clearing house to speed up the process

and clearing the operations quickly and efficiently which is voluminous work. Automated clearing house

(ACH) is an electronic network for financial transaction. ACH processes large number of debit and credit

transaction in batches.

National Automated clearing house Association (NACHA):

It helps to debit transfers for point-of-purchase (POP) check conversion. Both government and the

commercial sectors use ACH payment. Business are also increasing using ACH to collect payment online

from customers, rather than accepting credit or debit cards. Rules and regulations governing the ACH

network are established by NACHA and Federal Reserve. The Federal Reserve banks are collectively the

nations largest automated clearing house operator. FEDACH is the Federal Reserves centralized

application software used to process ACH transactions.

Electronic Clearing Services (ECS):

ECS is a mode of electronic funds transfer from one bank account to another bank account using the

services of a clearing house. This is used for bulk transfers from one account to many accounts or vice-versa.

Types of ECS:-

There are two types of ECS called ECS (credit) and ECS (debit).

1. ECS (credit)- is used for affording credit to a large number of beneficiaries by raising a single debit to

an account, such as dividend, interest, salary payment pension etc.

2. ECS (Debit)- is used for raising debits to a number of account of consumers/account holders for

crediting a particular institution e.g. payment to utility companies like telephone, electricity or charges

such as house tax, water tax etc. [6][7][8][9][10]

National Electronic fund Transfer (NEFT):

National Electronic Fund Transfer (NEFT) is an online system for transferring funds of Indian Financial

Institution (especially loans). This facility is used mainly to transfer funds below Rs. 2,00,000/- The NEFT

system in India lives with effect from 21 November 2005. NEFT was sent to cover all banks which were


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participating in the special electronic funds transfer (NEFT) clearing. NEFT was made on the structured

financial messaging solution (SFMS) platform. Public key infrastructure (PKI) technique used in NEFT for

maintaining security.

Electronic Funds Transfer (EFT):

Electronic Funds Transfer (EFT) is the electronic exchange or transfer of money from one account to

another. The exchange takes place between a single financial or across multiple institutions, through

computer based systems. RBI introduced EFT to help banks offering their customers money transfer

service from account to account of any bank branch to any other bank branch. The EFT system

presently covers all the branches of the 27 public sector banks and 55 scheduled commercial banks at

the 15 centers viz:- Ahmadabad, Bangalore, Bhubaneswar, Kolkata, Chandigarh, Chennai, Guwahati,

Hyderabad, Japura, Kanpur, Mumbai, Nagpur, new Delhi, Patna, and Thriuvananthpuram.

Cards Transaction:

Debit card is a plastic card which provides an alternative payment method for cash when makingtransaction. Using debit card cardholder can see balance available on account. Debit card is mainly used

for cash withdraw from ATM, at point of sale (POS), also on the internet for online purchase, funds

transfer, paying bills, accessing detail account information, charging PIN etc. Bank provides debit card

free of cost at the time of opening account.

From 1st Jan 2011, RBI declared that for every transaction with debit card on ATM user has to enter

password for every transaction. This is done for security purpose.

Core Banking:

Presently, a technological development is closely related to computerization in banks branches foradoption of the core banking solution (CBS). An important development in the percentage of branches

of public sector banks implementing CBS. The percentages of such branches increased by 79.4 % at end

March 2009 to 90% at the end of March-2010.

Table 5: Branches under Core Banking (in %)

Name of the BankPublic Sector

Banks

Nationalized

Banks

State Bank

Group

Branches under core banking solutions 90% 85.90% 100

Automated Teller Machine (ATM):

Even through ATM originally developed for cash dispenses, now it includes many other bank related

functions such as-Cash withdraw, Paying routing bills fees and taxes., Printing bank statement., Funds

transfer., Purchasing online products, Train tickets reservations, Products from shopping mall, Donating

to charities, Claque processing module, Adding pre-paid cell phone/mobile phone credit, Advertising

channels for own or third party products and services, Pay premium.


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The use of electronic payment has witnessed manifold increase, partly reflecting increased adoption of

technology. The growth of volume of ATMs indicates that customer most prefer ATMs for transactions.

ATMs provide different kinds of services per customer.

The volume of ECS credit and more significantly ECS debit continued to show an increasing trend during

2008-09 in line with the trend witnessed during past few years.

Magnetic Ink Character Recognition (MICR):

In India, MICR introduced in 1987 in the four metros cities. The MICR clearing is now in operation in 14

centers viz- Hyderabad, Bangalore, Ahmadabad, Kanpur, Japura, Nagpur, Baroda, Pune, Gauhati,

Trivandrum. It is proposed to be extended to a total 22 centers were volume of clearing transactions in

large.

Recently the paper-based system still continue to dominated in terms of volume, and therefore are

categorized as system wide important payment system(SWIPS), its share has; however, been declining

both in volume and value terms in recent years. Speed clearing, introduced in 2008, operating on thecore banking infrastructure of banks has now been mode available as a part of MICR. Dearing at all the

66 MICR cheque processing centers(CPCS).

Real time gross settlement (RTGS):

Real time means payment transaction is not subjected to any waiting period. In RTGS the transaction are

settled as they are processed. Gross settlement means the transaction is settled on one to one basis

without bunching or netting with any other transaction.

RTGS is funds transfer system where transfer of money or securities takes place from one bank to

another on a real time and on gross basis. Once processed, payment are final and irrevocable.

As on November 30,2010 there are more than 72000 RTGS enabled bank branches.

INFINET:

For working of e-banking, it requires various components like- communication channels, servers,

connecting networks etc. Reserve Bank of India (RBI) having prime control on e-banking services. RBI

monitor, control of e-banking by establishing and connecting various service providers in India. Following

are the service some of providers- INFINET stands for Indian Financial Network. There is a satellite based

wide area network using VSAT (Very Small Aperture Terminal) technology set up by the RBI in June 1999.

The hub and the Network Management System of the INFINET are located in the Institute forDevelopment and Research in Banking Technology, (IDRBT) Hyderabad (an institute set up by the RBI).

Services provided by INFINET:

Among the major applications identified for porting on the INFINET in the initial phase are e-mail,

Electronic Clearing Service - Credit and Debit, Electronic Funds Transfer and transmission of Inter-city


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Cheque Realisation advices. Later, other payment system related applications as well as Management

Information System (MIS) applications are proposed to be operationalised.[31]

BANKNET:

BANKNET is a internet based communication network. It provides speed of financial transaction.

BANKNET is set up in 1991 by the RBI, this backbone is meant to facilitate transfer of inter-bank (and

inter-branch) messages within India by Public Sector banks who are members of this network. [31]

Service Centers -At present, service centers are viz. Mumbai, Delhi, Calcutta, Madras, Nagpur,

Bangalore , Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi, Jaipur, Bhopal, Patna,

Bhubaneshwar, Thiruvananthapuram, Guwahati, Panaji Jammu.

Society for Worldwide Inter-bank Financial Telecommunication (S.W.I.F.T):

The S.W.I.F.T provides reliable and expeditious telecommunication facilities for exchange of financial

message all over the world. The gateway is in Mumbai and efforts are on to other cities through leased

lines/public data network. The majority of international interbank messages use the SWIFT network. As

of September

Institute for Development and Research in Banking Technology (IDRBT):

The main purpose of IDRBT is to adopt research and development as well as consultancy in the

application of technology to the banking and financial sector in the country. Reserve Bank of India (RBI)

established IDRBT in 1996.

Structured Financial Messaging Solution (SFMS):

Structured Financial Messaging Solution (SFMS) is helpful for inter-bank and intra-bank messaging. This

messaging is useful for applications like Electronic Funds Transfer (EFT), Real Time Gross Settlement

(RTGS), Delivery verses Payment (DVP), Centralised Funds Management System (CFMS). The SFMS was

launched in India on December 14, 2001 by RBI.

National Payment Corporation of India (NPCI) :

NPCI consolidate and integrate the multiple systems with varying service levels to nation-wide uniform

and standard business process for all retail payment systems. Also it helps to facilitate an affordable

payment mechanism to benefit the common man across the country and help financial inclusion.

Mobile Banking:

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing

balance checks, account transactions, payments, credit applications etc. via a mobile device such as a

mobile phoneor Personal Digital Assistant (PDA).

Dmat Card:
http://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Mobile_phone


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The demat account has to be treated virtually like a account with the difference being that instead of

actual cash there are shares in the account. A beneficiary account is an account opened by the investors

or broker with a Depository Participants (DP) of his choice, to hold shares in detmaterialised (demat)

form and undertake scripless trading. The investors must open a demat account with a DP. Opening a

demat account

Conclusion:

Use of technology in expanding banking is one of the key focus areas of banks. The banks in India are

using Information Technology (IT) not only to improve their own internal processes but also to increase

facilities and services to their customers. Efficient use of technology has facilitated accurate and timely

management of the increased transaction volume of banks of that comes with larger customer base. By

designing and offering simple, safe and secure technology, banks reach at doorstep of customer with

delight customer satisfaction.

IBPS Interview Preparation Sheet

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