Bank Interview Questions

It is a letter of credit or a contractual agreement between financial institute (Bank) and the party to which the letter is handed. The ILOC letter cannot be cancelled under any circumstance and, guarantees the payment to the party. It requires the bank to pay against the drafts meeting all the terms of ILOC. It is valid upto the stated period of time. For example, if a small business wanted to contract with an overseas supplier for a specified item they would come to an agreement on the terms of the sale like quality standards and pricing, and ask their respective banks to open a letter of credit for the transaction. The buyer’s bank would forward the letter of credit to the seller’s bank, where the payment terms would be finalized and the shipment would be made.

Overdraft protection is a service that is provided by a bank to their customer. For instance, if you are holding two accounts, saving and credit account, in the same bank. Now if one of your accounts does not have enough cash to process the cheques, or to cover the purchases. The bank will transfer money from one account to another account, which does not have cash so to prevent check return or to clear your shopping or electricity bills.

NSF means - Not Sufficient Funds.

Banks provide their clients with advice, assistance in arranging financing, and other services, such as access to trading on the markets, investment management, and risk reduction. Their main source of revenue is the fees they charge their clients for these services. Some banks have departments which invest or trade the bank’s own money to generate returns, though the extent to which they can do so has become more limited in recent years.

The different types of loans offered by banks are:

a) Unsecured Personal Loan

b) Secured Personal Loan

c) Auto Loans

d) Mortgage Loans

e) Small business Loans

SLR Rate is the minimum amount or percentage of the deposits that a bank has to keep with the RBI in the form of money,gold or any other approved security. In simple terms it is the ratio between cash and some approved security.

A Budget is a financial plan of expected cash inflows and outflows that a business generates.
It is generally a long-term statement involving ammual updates. It is best described as A formal statement of a company's future plans usually expressed in monetary terms.